Posted at 6:52 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

This entire destruction is a product of our dear friends, the OTC derivative manufacturers and distributors.

We are getting the destruction reports piece by piece.

Piece by piece it will all be bailed out.

Hyperinflation as the major consequence cannot be avoided by any means short of Divine.

Those financially in charge are the antithesis of Divine.

Are you ready?

45 percent of world’s wealth destroyed: Blackstone CEO
Wed Mar 11, 2009 3:10am EDT
By Megan Davies and Walden Siew

NEW YORK (Reuters) – Private equity company Blackstone Group LP (BX.N) CEO Stephen Schwarzman said on Tuesday that up to 45 percent of the world’s wealth has been destroyed by the global credit crisis.

"Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half," Schwarzman told an audience at the Japan Society. "This is absolutely unprecedented in our lifetime."

But the U.S. government is committed to the preservation of financial institutions, he said, and will do whatever it takes to restart the economy.

U.S. Treasury Secretary Timothy Geithner plans to unfreeze credit markets through a new program that will combine public and private capital in a fund that would buy bank toxic assets of up to $1 trillion.

"In all likelihood, that will have the private sector buy troubled assets to clean the banks out in terms of providing leverage … so that we can get more money back into the banking system," Schwarzman said.

More…

Jim Sinclair’s Commentary

Since US Treasury instruments carry the full faith and implicit guarantee by the US government, what is China saying here? Do they want gold as a guarantee as the only other guarantee might be a mortgage on the White House.

Whenever a statement is issued by a high placed representative in China it is serious and well considered. It is not an offhand remark.

It sounds like "keep the G20 off our currency or we will hammer you!"

Jiabao ‘Worried’ About Safety of U.S. Investments, Wen Says
By Eugene Tang

March 13 (Bloomberg) — China wants the U.S. government to “ensure the safety” of its investments in the world’s largest economy, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said today at a press conference in Beijing that marked the closure of the annual National People’s Congress meeting. “Of course we are concerned about the safety of our assets. To be honest, I am a little bit worried.”

More…

Jim Sinclair’s Commentary

This is starting to mirror the 1970s. I told you it would happen!

Banks were January net buyers of 1.1 million oz of gold: CPM
New York (Platts)–10Mar2009

Central banks, which have been net sellers of gold in recent years, were net buyers of an estimated 1.1 million oz in January, according to the latest Market Alert by the CPM Group, the New York-based metals consultancy. The world’s central banks were both buyers and sellers, but the quantity bought outstripped what was sold.

Ecuador is estimated to have purchased 920,000 oz of gold in January, Venezuela bought 240,000 oz and Russia purchased 130,000 oz, after having bought 310,000 oz in December.

"Ecuador’s government has run into severe political and economic problems, and has a dollarized economy, using the US dollar as its currency and thus not having many monetary tools, such as being able to issue money that other central banks possess," CPM noted. France was the largest seller of gold in January by 40,000 oz and 10,000 oz, respectively.

More…

What is an Earmark?

Earmarks are funds provided by the Congress for projects or programs where the congressional direction (in bill or report language) circumvents the merit-based or competitive allocation process, or specifies the location or recipient, or otherwise curtails the ability of the Executive Branch to properly manage funds. Congress includes earmarks in appropriation bills – the annual spending bills that Congress enacts to allocate discretionary spending – and also in authorization bills.

http://earmarks.omb.gov/

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My Dear Friends,

What do you wish your estate to look like, a bag of paper or gold?

Gold is going to $1224 and $1650 on its way to Alf’s numbers.

I made my decision and it was carried in the Forbes article of 2001 found here.

I have not changed one cubit from 2001 – I have only added to it. I challenge anyone out there to do better trading.

Success comes from making a plan and working a plan within a bull market. Failure comes from the egomania that says you, the newbie, can out trade the seasoned pro of 25 years or more. This is total and complete madness.

As the song the Gambler sings goes, the best you can hope for is the break even. Listen to the Gambler and learn a great lesson.

Today the US dollar declared its intention of retesting and failing at .7200

Regards,
Jim

Jim Sinclair’s Commentary

You know this is a product of the many Fed dollar swaps done to camouflage the bailout of non US banks in Switzerland and elsewhere. That is why those that predict the imminent collapse of Switzerland are smoking something.

Today’s action in the Swiss franc could have been a gift from the Swiss national bank to the massive shorts in the non-euro European currency raid that has taken place as another price for the Fed bailing out UBS and many others.

I have seen this kind of game played before. What a world we live in.

I would say if you have not cheated uncle, you need not worry. Remember my advice to play straight.

Liechtenstein eases bank secrecy amid crackdown
Thu Mar 12, 2009 8:34am EDT
By Jason Rhodes

VADUZ, Liechtenstein, March 12 (Reuters) – Liechtenstein agreed to ease its strict bank secrecy by committing to international tax and data standards, increasing pressure for similar concessions from other tax havens.

The move comes as finance ministers from the G20 group of rich nations and emerging powers prepare to meet in Britain from Friday ahead of a summit in London on April 2 that is expected to seek ways to fight tax evasion through offshore centres.

The tiny principality, a financial centre wedged between Switzerland and Austria, is seeking to be removed from a blacklist of tax havens and will now offer bilateral tax deals for cooperating in cases of tax fraud and tax evasion.

"Today’s declaration was very important in the run-up to the G20 meeting, so that Liechtenstein’s strategy is recognised," Prime Minister Otmar Hasler told a news conference.

Liechtenstein, whose banks have suffered big withdrawals since Germany launched a probe last year into 1,000 citizens suspected of dodging tax by parking money there, said its move could serve as an example to other nations under pressure.

More…

Jim Sinclair’s Commentary

Defuse Pakistan? You have to be kidding!

That is the same as trying to make Mullah Omar a Christian. Impossible and stupid.

US and British diplomats scramble to defuse Pakistan crisis
Zahid Hussain in Islamabad and Jeremy Page in Lahore

US and British diplomats were scrambling to broker a truce between Pakistan’s feuding political leaders tonight as thousands of black-suited lawyers defied a government ban to launch a mass protest across the country.

Richard Holbrooke, the new US special envoy for Pakistan and Afghanistan, telephoned Asif Ali Zardari, Pakistan’s President, to discuss the unrest, which has raised fears that the army could take power once again.

“Mr Holbrooke conveyed the anxiety of the US Administration over the worsening political crisis and asked the president to find ways to end the strife,” a senior Pakistani official told The Times.

David Miliband, the Foreign Secretary, also spoke to Mr Zardari as lawyers and opposition activists clashed with police at the start of a “long march” from major cities towards Islamabad, the capital. Organisers hope that hundreds of thousands will join the march, due to end with a rally in front of the national parliament on Monday, to demand that the government reinstate judges deposed under Pervez Musharraf, the former president.

Nawaz Sharif, the former Prime Minister whose party quit the government last year over the same issue, has urged Pakistanis to join the march and to rise up against their weak civilian government.

More…

Jim Sinclair’s Commentary

This the end of the beginning and now the plot is the beginning of the end of the present Pakistan government.

The buggers (present Paki government) were suckered into doing just what they should not have done.

Pakistan police swarm into major anti-government demonstration
By Mark Magnier 
11:56 AM PDT, March 12, 2009

Reporting from Islamabad, Pakistan — Police overwhelmed anti-government protesters today in Karachi, Pakistan’s largest city, arresting opposition leaders and preventing several hundred lawyers and activists from leaving for a planned demonstration in Islamabad.

Over the past 24 hours, the government of President Asif Ali Zardari has detained hundreds of people critical of its policies, arguing that public gatherings could serve as a focal point for terrorists and otherwise endanger property and lives.

Authorities also banned public assembly in two key provinces and blocked major roads leading into Islamabad, the capital, with barriers and paramilitary vehicles.

"The government has resorted to raiding the houses of the leaders of political parties," said Farooq Tariq, an official with the Pakistan Labor Party. "I’ve been underground for the last three days."

Lawyers were at the forefront of demonstrations against the former government of President Pervez Musharraf, who incurred their wrath in part by firing dozens of senior judges in 2007 in an apparent bid to head off legal challenges to his rule. The attorneys have continued to press Zardari to reinstate key judges.

More…

Hundreds seized as panicky Asif Ali Zardari struggles to keep grip on power
March 12, 2009

Pakistan rounded up hundreds of lawyers, activists and political opponents yesterday before protests that threatened to loosen the Government’s increasingly shaky grip on power.

Raja Zafarul Haq, a senior opposition leader, was placed under house arrest and police were hunting for Imran Khan, the former cricketer-turned-politician, after he escaped a police raid on his house in the middle of the night.

Clashes broke out in many cities in the eastern province of Punjab, where protesters took to the streets defying the government ban on public gatherings.

The crackdown, the most severe since the US-allied Government came to power a year ago, will damage the democratic credentials of President Zardari further. His administration is already rocking from a growing Islamic insurgency that culminated last week in a deadly attack on the touring Sri Lanka cricket team. The army, which has repeatedly seized power in Pakistan from civilan governments, was placed on high alert as tension mounted. Most of those detained belonged to the opposition Pakistan Muslim League (N) led by Nawaz Sharif, the former Prime Minister, and Imran Khan’s Tehreek-e-Insaf. Scores of others who evaded the morning raids have gone into hiding.

Police and paramilitary troops sealed off the capital, Islamabad, where opposition parties and lawyers planned to stage a sit-in outside the parliament building.

“My house was raided at 3 in the morning but I managed to escape,” Imran Khan told The Times on the telephone.

More…

 

 

Jim Sinclair’s Commentary

The following is from JB Slear, famous to us and infamous to our evil Comex brothers.

Pretending to be a Mutual Fund manager after losing ¾’s of their clients liquidity, or just a princess. Your pick

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Jim Sinclair’s Commentary

OTC derivative plus the market is the correct reason.

Note the underfunded amount. This also does not include January 1 to present!

I would make a guess they would be $400 to 500 billion down if accounted for today.

Largest U.S. pension plans’ assets fall $217 billion short
By Sandra Block and Sue Kirchhoff, USA TODAY

Last year’s stock market collapse left the nation’s largest private pension plans with a deficit of more than $200 billion, a study released Wednesday said, which could force companies to invest more money in their plans when they can least afford it.

The nation’s 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008, holding only 79% of the assets needed to cover estimated long-term liabilities. That compares with an $86 billion surplus — 109% of estimated liabilities — at the end of 2007, according to Watson Wyatt, a human resources consulting firm.

Pension plans’ assets fell 26% last year, primarily because of investment losses, the study said. A separate study released Wednesday by Milliman said the nation’s largest plans lost an additional $54 billion in February.

It’s not unusual for companies to have underfunded pension plans, and the deficit typically doesn’t affect payouts to near-term retirees. But to avoid future problems, companies with underfunded pensions are required to increase contributions.

Companies are also facing stricter federal funding requirements for pensions, says David Speier, senior retirement consultant at Watson Wyatt. "This combination will require employers to make staggering pension contributions over the next couple of years, at a time when they can least afford them."

More…

JB Slear’s Commentary

That’s it!! Time to protest in the streets.

Chocolate tax call in obesity fight

Chocolate should be taxed in a bid to control the obesity epidemic, a medical conference will hear.

A doctor called to tax chocolate to fight obesity

Family doctor David Walker believes that chocolate is a "major player" in the problem of the country’s expanding waistlines.

Taxing the treat would raise its profile as an unhealthy food which can contribute to weight-related conditions including diabetes, high blood pressure and back pain, the Lanarkshire GP will tell doctors at a conference in Clydebank.

He said people are often eating more than half a day’s worth of calories when they polish off a bag of chocolates in front of the television.

Dr Walker, based at Airdrie Health Centre, said: "I believe that chocolate is a major player in obesity and obesity-related conditions.

"What I’m trying to get across is that chocolate is sneaking under the radar of unhealthy foods.

"More than one person has said to me, ‘oh, but isn’t chocolate good for you?’ but any benefits are more than outweighed by the detrimental effect of obesity.

More…

 

Jim Sinclair’s Commentary

I am appalled that a major source of World Economic data can just adopt a new computer model and no one questions it.

The following, as I have told you, was what the Bank for International Settlement stated prior to adopting a new computer model to reduce it by 50%.

Where is the outrage? Nowhere I imagine in a world populated by sheep.

Global Derivatives Market Now Valued at $1.14 Quadrillion!
By: Jutia Group   Thursday, July 24, 2008 1:40 PM

The Bank of International Settlements, which seems to be the only institution that tracks the derivatives market, has recently reported that global outstanding derivatives have reached 1.14 quadrillion dollars: $548 Trillion in listed credit derivatives plus $596 trillion in notional/OTC derivatives.

Yes, that is Quadrillion. One and 15 zeroes!

More…

 

Jim Sinclair’s Commentary

This (corporate losses of the too big to fail) is not ending. Bailouts (every dime and more) are not ending.

Therefore the prediction by the Super Bears of a further implosion in business activity after a dead cat bounce guarantees hyperinflation and gold at Alf’s levels.

Take that you mal-informed deflationists that do not know the definition of deflation.

Freddie Mac reports massive loss

US mortgage giant Freddie Mac has revealed a loss of $50.1bn (£36.1bn) for 2008, and said it plans to ask the government for another $31bn of aid.

The company had already received $13.8bn in federal aid last year.

Freddie said the last quarter had been particularly bad, reporting a loss of $23.9bn for the three months to the end of December.

Last month, fellow mortgage company Fannie Mae reported an annual loss of nearly $59bn due to the housing crisis.

It also said it needed $15.2bn in government aid.

The huge losses made by the companies led to the government bailout.

More…

Jim Sinclair’s Commentary

The Whopper Award of the century goes to Alan Greenspan

Greenspan again finds the Fed blameless in housing bubble
10:35 PM, March 11, 2009

Alan Greenspan just cannot bring himself to say, "I’m sorry."

The former Federal Reserve chairman wrote an op-ed piece for the Wall Street Journal on Wednesday that repeated his favorite refrain: The Fed’s easy-money stance of 2002-2004 didn’t cause the housing bubble.

It wasn’t the rock-bottom short-term interest rates of that period, as dictated by Fed policy, that fueled the housing mania, Greenspan says.

Rather, he blames "the decline in long-term interest rates across a wide spectrum of countries" from 2000 through 2005.

Long-term interest rates, Greenspan wrote, became "disconnected" from Fed policy in that period as rising wealth in China and other foreign countries was plowed into Treasury bonds and other long-term fixed-income securities — pushing long-term rates down, including on 30-year mortgages.

In other words, the housing bubble was "all the fault of those pesky foreigners," says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, N.Y.

More…

Posted at 4:06 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

This is a pretty good explanation of the financial crisis.

CIGA Doug

"Heidi is the proprietor of a bar in Berlin Germany. In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed alcoholics – to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around and as a result increasing numbers of customers flood into Heidi’s bar.

Taking advantage of her customers’ freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit.

He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar.

However they cannot pay back the debts.

Heidi cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80 %.

The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Finally an explanation I understand…"

Dear Mr. Sinclair,

According to Martin Armstrong: "We may be in the midst of a "Waterfall Effect" that could undermine the very structure of Western Civilization. Historically, it has always been the debt crisis that destroys the greatest plans of men and dictators. This could be phase two of the collapse of Marxism. After phase one reshaped Russia and China, phase two may mean that it is the United States’ turn."

He goes on to state: "I cannot stress enough that the level of volatility that we are experiencing during this financial crisis is just well beyond even that experienced during the early stages of the Great Depression and is more akin to the collapse of Rome."

He concludes with the following: "We are on the edge where the way of life may be altered forever."

And now for the bad news…

Cheers,
Mahatma

Mahatma,

I wish it were not true, but the last many years, most certainly the last, has busted the West making them stone cold broke. Gold is the only answer. There is nothing else!

Armstrong, although certainly colorful life wise, is a genius – a word I rarely use. To not take heed will cost you greatly!

I strongly recommend that you and all readers of JSMineset see the interesting movie "W."

Jim

Martin Armstrong: Is It Time To Turn Out The Lights?
Posted: 03/11/2009 21:27:45

This Economic Depression is far more complex than meets the eye. I believe that the Investment Bankers, in their own greed, used the final days of the Bush Administration to try to grab as much as they could while there was an ex-Goldman Sachs boss in the driver seat.

Full Story:

Click here for original source…

Posted at 2:45 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

The big stunner of today was massive intervention by the Swiss National Bank into the Forex markets which absolutely obliterated the Franc. They caught everyone flatfooted and achieved maximum shock value. I had to double check my price quotes and the charts to make sure that they were correct as the currency simply evaporated… The last time the SNB had intervened in these markets was all the way back to 1995 or 14 years ago.

The Swiss cut their 3 month Libor target by 25 basis points but they also stepped into the bond market and purchased substantial amounts of Swiss franc bonds. That in combination with them buying large amounts of foreign currency is in my view what shoved gold up so sharply today. The strategy of the Swiss is pretty clear – undercut their own currency to remain export competitive especially against the Euro and the US Dollar and provide substantial amounts of liquidity in the process. While I have not yet had a chance to calculate the gold price in terms of the Swiss Franc, there is no doubt whatsoever that it shot sharply higher today. After all, it is evident that the Swiss have decided to play the “beggar thy neighbor” policy in terms of the foreign exchange arena. All of this serves to remind investors why it is an imperative in today’s environment to own gold – after all, if your Central Bank is determined to debauch your native currency, you have to protect yourself. It is that simple!

I can well remember when the Swissie was once the “go-to” currency when it came to a safe haven during times of economic or geo-political crisis. Obviously that is no longer the case. My how times have changed! It is going to be interesting now to watch the contest between the SNB and the speculators to see how the game is played out. Will the specs leave them alone or will they play the cat and mouse game and bid it back up to see what kind of reaction they get from the Swiss monetary authorities.

I find the move by the Swiss particularly interesting in light of the following story carried by Reuters –

Click here to view the story…

Note – the Obama’s “tax everything that moves until you kill it” policies coupled with his smash-mouthing of energy companies is indeed having the effect that so many have warned – they are chasing US Corporations out of the US and with that will go many high quality, high paying jobs.

The rush back into gold shoved it up into resistance that I noted yesterday near the $930 level. That is the top of the potential range trade with $890 serving as the bottom. The 25% Fibonacci retracement level also comes in near the $930 level so it has a technical significance. Gold will need to push through this level and through the 20 day moving average near $950 to run out some more of the shorts that were put on early this week. Initial support still remains down near $890 to $880.

Euro Gold managed to build on yesterday’s bounce up and away from the €700 level coming in at €724.777 at the PM Fix with British Pound priced gold moving further away from the 650 level as it was fixed at 671.737, not far off of its all time high at 690.353 for a London PM Fix. Both movements bode well for gold in US Dollar terms as the 700 level in the Euro gold and the 650 in the Pound priced gold both are somewhat synonymous, loosely speaking, with even number $900 in US Dollar terms.

Rolling has begun in the Comex April gold contract and will intensify as we head into the next two weeks.

Today was obviously a reflation day as most commodities were higher with even natural gas getting a bit of a bounce off its fresh 7 year lows of yesterday. That is interesting because the Dollar was higher – again, in contrast to what we have been seeing recently. As I said yesterday, attempting to decipher the day to day gyrations in these whacked out markets is pretty much a guessing game since no one really knows what the psychology is going to be from day to day among the investing public and hedge funds.

I don’t know what got into the bonds yesterday that caused such a sharp rally especially since equities were higher across the board. There was chatter that a particular auction went off better than some were expecting and I suppose that served to allay supply fears somewhat. Technically they managed quite a save as they were on the verge of another technical leg down on the price charts. Bulls dodged a bullet, that is for certain – at least for now. We are seeing further upside in them today as news that the 30 year auction was well received ran the shorts out of their positions – the ongoing technical play continues. They would have to run above 128^00 to give the charts a more constructive look with a move above 130^00 to really spook the bears and threaten to be more than a bounce. The speed at which they are currently rising is indicative of a helluva lot of shorts getting squeezed out. One has to wonder who is going to buy once that has run its course as this is not safe haven buying. Then again, I am amazed that the auctions are supposedly going so well – You could not pay me to own this stuff not with what is coming down the pike.

The mining shares, while higher today as evidenced by the HUI and XAU, still have a lot of technical damage to repair. The 295-296 level in the HUI is a must if it is going to be able to run the bears out of their dens while 124-125 must be taken out in the XAU to prove the bulls are in command. Apparently share dilution to finance ongoing operations is taking its toll on many of the miners but it still beats non-recourse loans if you ask me with their toxic hedged positions. At some point the cost savings in the mines as a result of falling energy prices, etc, will pass through and find their way onto the books. That along with more cash on hand to finance acquisitions should make things interesting in the future.

Equities are now building on their third consecutive day of gains. That will have bottom pickers brimming with confidence and nervous shorts continuing to cover as the squeeze continues. Today’ gains were attributed to not as bad as expected retails sales data and a downgrade of GE debt that was not as severe as many were anticipating.

I will be unable to provide a midday commentary tomorrow due to another obligation but will hope to get something up later in the evening if time permits. Ditto for Monday of next week.

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

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Posted at 1:03 AM (CST) by & filed under General Editorial.

Dear CIGAs,

A successful precious/base metals operation should be incorporated in one county and operating in another while internationally listed.

The greatest political and environmental risk to all mining exists in the US.

This is a form of Dean Harry’s ultimate means of protection. Dean Harry teaches that ultimate protection lies in a 3 step life style; "Citizenship in one country, body in another and money in a third."

With a liberal administration, the US mining lobby has an uphill fight on this one.

From Chris Laird’s PrudentSquirrel.com…

The US congress is proposing new very restrictive mining regulations like yearly inspections and a whole gamut of new regulations specifically on precious metal miners….in the name of the environment… it’s hard to say the effect on big US mines, but the smaller ones will have lots of trouble with this if it gets through.

Rahall Proposes Bill to End All Mining in the U.S.
by Scott Harn

Nick Rahall, chairman of the House Resources Committee, reintroduced mining reform legislation in the House of Representatives on January 27, 2009. The Congressman has obviously been away from real work for far too long. H.R. 699, the Hardrock Mining and Reclamation Act of 2009, should be labeled H.R. 666 because it appears to have been written by the Devil himself. If it passes as written, it will completely destroy an entire industry.

H.R. 699:

· Casual use would be redefined to allow only those activities that do not cause “any disturbance of public lands and resources.” The collection of samples, use of gold pans and non-motorized sluices would be the only activities allowed without a Notice or Plan. Taking a vehicle off-road would also require a Notice or Plan. Any extraction of minerals for sale or use would require a Notice or Plan.

· H.R. 699 would be retroactive. Existing mining that is not already operating under a Notice of Plan would require proof of a valuable discovery to retain a mining claim, and those operating under a Notice or Plan would have ten years to bring their operation under compliance with the new regulations.

· The patenting of mining claims, which has been suspended by yearly legislation since 1994, would be permanently discontinued.

· The federal government would be entitled to an 8 percent gross royalty for all locatable minerals for any new mining operation.

Link to article…

 

Even if the miner is unable to make a reasonable profit at current commodity prices, he would have to give 8 percent to the federal government. Existing operations at the time the bill is passed would be subject to a 4 percent gross royalty, and any federal lands added to the operation after enactment of the bill would be subject to the 8 percent royalty.

The reporting requirements are absurd. Anyone transporting a locatable mineral, concentrate or product derived from a locatable mineral shall carry documentation declaring the amount, origin and intended destination. Miners shall create and maintain reports relating to the quantity, quality, composition, volume, weight and assay value of all minerals extracted from a mining claim. Failure to produce these reports when requested by any officer or employee designated by the federal government may result in involuntary forfeiture of the mining claim. …"

Best,
Chris

Disclaimer:
Chris Laird is not an investment advisor/professional. This article, and the PrudentSquirrel newsletter, and alerts, are general market commentary only. It is not intended as specific advice. You should talk to your own investment professionals for specific advice. All information is deemed reliable but is not guaranteed to be accurate. Any information deemed important should be verified by you.

Posted at 12:50 AM (CST) by & filed under General Editorial.

Dear CIGAs,

The Federal budget, or total receipts less total outlays, divided by GDP defines “The Formula.” The Federal budget is normalized or divided by GDP to remove the effects of dollar devaluation and smoothed to provide unbiased historical comparisons. For example, -5% Formula reading in 1992 is largely comparable to the -5% Formula reading in 2008.

I say largely because the two Formula readings, statistically speaking, are not comparable. The GDP time series has become increasingly bias over time due to subtle changes in the way it is calculated since the early 1980s. For further discussions on the reality of GDP and other official government times series please click here…

The leading formula is nothing more than a slight modification of the “Formula.” Tax withheld less outlays, divided by GDP defines the “Leading Formula.” Taxes withheld, a subsector of total receipts, is more sensitive to marginal changes in business activity. This sensitivity provides leading characteristic within the Formula calculation and provides valuable insight to changes in trend.

As stated previously on www.jsmineset.com, an economy is either rising at a rising rate or business activity is falling at an increasing rate. This is economic law 101. Falling business activity manifests itself as falling “Formula” values. Think of the Formula, Trade and Current Account Deficits as a speedometer of money flows in/out of the US. A negative speedometer in the "Formula" reading implies outflows. Ultimately, persistent outflows will send interest higher and devalue the dollar. For a detailed review of how the formula works click here…

The Formula has broken the 1983 and 1992 lows and continues to accelerate to the downside in 2009.

Regards,
CIGA Eric

Click here to visit CIGA Eric’s group on Facebook…

Click charts to enlarge

TW Leading Formula

 The Formula

Posted at 4:24 PM (CST) by & filed under In The News.

In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress. 
–John Adams

Dear CIGA Frustrated,

You voiced your concern of why participants in the gold and dollar market do what they do in modern times with all the information available to them.

The following video will clear up all your doubts. The music is the Comex band of jolly short of gold manipulators.

The people are of course the gold gang.

Sincerely,
Jim

Jim Sinclair’s Commentary

The madness continues. Consequences will not be avoided.

Freddie asks Treasury for $30.8 bln after big quarterly loss
By Alistair Barr
Last update: 4:38 p.m. EDT March 11, 2009

SAN FRANCISCO (MarketWatch) — Freddie Mac (FRE)asked the government for billions of dollars in extra support late Wednesday after reporting a fourth-quarter net loss of $23.9 billion, or $7.37 a share. That was a slight improvement from the third quarter of last year, when the mortgage giant suffered a net loss of $25.3 billion, or $19.44 a share. The Federal Housing Finance Agency, which oversees Freddie, has asked the Treasury Department for $30.8 billion and the company said it expects to receive that money in March.

More… http://www.marketwatch.com/news/story/Freddie-asks-Treasury-308-bln/story.aspx?guid={218D6426-B7C9-43CC-A568-4D89BB173C78}


Jim Sinclair’s Commentary

Please refer back to the illustration posted yesterday showing what a trillion dollar looks like in 100 dollar bills.

Now consider that before the BIS changed their figures to Shiller’s BS computer cartoon value to maturity, the number they reported was ONE QUADRILLION ONE THOUSAND ONE HUNDRED and 44 TRILLION

Now there is one major pile of toilet paper.

Regards,
Jim

Jim Sinclair’s Commentary

It is not AIG that is being fed. The funds go in the front and out the back to the winners of the derivative which are not the brokerage firms someday to be named.

For every loss there is a gain. Note that the AIG monster is sitting on top of the OTC derivatives winners.

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Jim Sinclair’s Commentary

I love this. At the Mesa, AZ, KFYI Radio and TV listeners brought signs telling Santa Obama that they wanted fair treatment equal to the fat cat bailouts of the Wall Street pigs.

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Jim Sinclair’s Commentary

Until the uptick short sale rule is reinstated and where it still exists is enforced, along with criminal charges for naked and pool short selling occurs, no equity rally will have good legs.

Tick-tock, the uptick rule is about to expire
Commentary: Implementation won’t save market, but it will help
By MarketWatch

NEW YORK (MarketWatch) — As if it weren’t bad enough for hedge funds, now there’s credible talk that the uptick rule, which curbs some short selling, could be on its way back in a matter of mere weeks.

House Financial Services Committee Chairman Barney Frank, D-Mass., told reporters at a press conference Tuesday with House Speaker Nancy Pelosi that he expects the Securities and Exchange Commission to introduce a draft rule to reinstate the uptick rule next month.

Critics of short sellers, including Charles Schwab and the head of the New York Stock Exchange, Duncan Niederauer, have argued that the rule’s elimination has contributed to the economic downturn or is harmful to issuers.

Under the uptick rule, eliminated in 2007, short sellers were allowed to make their bets only when the price of a stock moves up. That would create a hurdle, but not a roadblock, for short sellers who in recent years have become a bigger part of the trading marketplace.

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Jim Sinclair’s Commentary

In terms of hyperinflation, certain to occur, this article is valid.

DB Advisors Says Commodity ‘Bull Market’ Still Intact (Update1)
By Millie Munshi

March 10 (Bloomberg) — A “secular bull market” in commodities remains intact and prices of oil and copper will rebound in the second half, according to Theresa Gusman, the head of equity research for Deutsche Bank AG’s DB Advisors unit.

Government spending in China and the U.S. will boost infrastructure construction and spur gains in demand for industrial commodities, Gusman said today. Increasing cash injections will accelerate inflation and bring gains in gold prices, she said. Limited supplies and declines in exploration budgets will also help underpin raw materials, she said.

“Policy makers are hell-bent on stabilizing the financial system,” Gusman, who manages $215 billion, said at a meeting with reporters in New York. “This will bring greater demand for commodities and make prices go higher.”

Commodities have plunged in the past eight months as the global recession eroded demand. The Reuters/Jefferies CRB Index of 19 raw materials sank 56 percent from a record on July 3 before today. The declines began after the gauge posted 29 percent jump in the first half of 2008.

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Jim Sinclair’s Commentary

Here is another problem certain the blow its lid.

The rise & rise of Pakistan’s Taliban
11 Mar 2009, 0155 hrs IST, Subodh Varma, TNN

In the spring of 1994, a new military force appeared in Afghanistan, the graveyard of empires. Legend has it that its first public action was in Kandahar. A local warlord had abducted two girls for serving his troops. One night, a group of young, bearded Pashtuns, wearing black turbans emerged from the darkness, stormed the base, rescued the girls and hanged the warlord from the turret of a tank.

They were called the Taliban, and soon they stormed Kabul and established one of the most brutal regimes in the world, based on a narrow fundamentalist interpretation of Islam.

Their origins lay in the western border areas of Pakistan, where thousands of Afghans, mainly Pashtuns, had fled during the decade-long jihad against the Soviet army. A whole generation of boys grew up in refugee camps in tribal areas, learning the ideology of hate and revenge. The camps and seminaries were organised by the Pakistani government, with funds received covertly from the US (for fighting communism) and openly from Saudi Arabian armchair jihadists who wanted to spread Islam. Because of their origins in madrassas, these fighters were called the "Taliban", or students.

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Jim Sinclair’s Commentary

Our CIGA Gold Delivery Man, JB Slear, is famous!

Where can private investors buy the cheapest gold?
By Rob Mackinlay

"Unlike futures-backed investment products which never actually take delivery of gold and silver, but continuously renew their investments in the paper markets, sophisticated investors wanting to get their hands on the real thing, buy the contract in the deliverable month and wait for it to expire.

JB Slear, a gold and silver broker based in Arizona specialises in helping high net worth clients take delivery of gold and silver futures contracts. He said that overseas buyers could face particular problems: "We’re finding more restrictions being applied to overseas buyers, seems one of the four warehouses will not allow overseas deliveries. We have just been told this by one of the Comex warehouses today. I don’t know if this is a lack of communication or not so, for the sake of all, we need to consider this a rumour till we have more people claiming the same problem."

Slear tells his clients that they may have to wait more than two weeks to take delivery as delays and complications in the process have become increasingly commonplace more so now than during the Christmas season. In some cases this has fuelled concern that stockpiles are running out. Slear is not convinced by this explanation and blames skeleton warehouse staffing for most of the delays.

But he said that the level of interest in this method of buying gold and silver had increased significantly between November and December.

The reason for the interest is obvious. Slear said: "I know of no other place in this country that offers a price equal to the Comex exchange, nothing comes close. Even with my Premium Delivery Service added, it’s far more reasonable to buy from Comex."

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Jim Sinclair’s Commentary

More on the miscreants:

The Most Dangerous Neighborhood in the United States

"Be careful."
"Keep your wallet safe."
"Don’t get your money stolen."
"Stay out of dangerous neighborhoods."

My parents used to say that to me when I was first going out on my own. I never got the definition of what a "dangerous neighborhood" was – you were just supposed to know. It was a place where people preyed on you. Predators, like jackals circling, waiting to pounce, ready to take your hard earned money from you. That’s what happens in dangerous neighborhoods. That’s why you should stay away from places like that.

As I got older, I wondered what exactly is a "dangerous neighborhood"? Most of us grew up assuming it was an area where poor people lived, people who didn’t dress well, didn’t have nice homes, didn’t have nice cars, didn’t have any interest in working for a living. People who just take and assume they’ll never get caught or even worse, don’t care if they do. However, that is a highly subjective criteria. How does one quantify that and determine the kind of place where you will most likely be separated from your money?

The Federal Bureau of Investigation provides statistics that may help us gain insight into where and how you are most likely to have your money stolen.

The FBI defines robbery as the taking of anything of value from a person by force or threat of violence. Robberies cost victims an estimated $588 million in 2007.

The FBI defines larceny-theft as the stealing of any property or article that is not taken by force or by fraud. In 2007 there were an estimated 6.6 million larceny-thefts, costing victims an estimated $5.8 billion dollars.

Securities fraud refers to deceptive practices in the stock and commodity markets including Ponzi schemes, high yield investment and hedge fund fraud and just about any way it is possible to lie about the promise of big returns on a variety of investment instruments. In 2006, the most recent year a total was listed, the FBI estimated losses at $40 billion.

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Jim Sinclair’s Commentary

In times past crowds dragged bankers out of their offices on Wall Street and hung them from lamp posts.

CORRECTED-Protesters target U.S. foreclosed-homes auctioneer
Tue Mar 10, 2009 6:19pm EDT

In March 8 story "Protesters target U.S. foreclosed-homes auctioneer," corrects story to include company’s response to protest in paragraphs 6 and 9.

NEW YORK, March 8 (Reuters) – An auction of foreclosed homes in New York City on Sunday drew protesters who blamed banks for an epidemic of home losses and called for a moratorium on evictions and foreclosures.

Two dozen people marched outside a Manhattan convention center where Real Estate Disposition Corp was auctioning off several hundred foreclosed homes, chanting and carrying signs reading "Banks get bailed out, people get thrown out."

The protesters said their argument was not with would-be homebuyers, who streamed into the auction without taking much notice, but with banks that had reaped benefits of government bailout funds after years of irresponsible lending practices.

"We’re not angry at the people who are looking for a cheaper home," said Larry Holmes, a spokesman for the Bail Out the People Movement, which staged the demonstration.

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Jim Sinclair’s Commentary

They predict inflation. I guarantee you hyperinflation.

Pimco Predicts Inflation, Joining Buffett, Marc Faber (Update3)
By Wes Goodman

March 11 (Bloomberg) — Pacific Investment Management Co. which runs the world’s biggest bond fund, joined investors Warren Buffett and Marc Faberin saying inflation will quicken, sounding a warning for Treasury investors.

U.S. government and Federal Reserve efforts to snap the recession will increase costs for goods and services as soon as 2010, Pimco said in a report today on its Web site by Chris Caltagirone and Bob Greer. Commodity producers are also delaying projects, which may limit supply and lead to higher prices when global growth resumes, according to Pimco.

“Inflation will rise,” Pimco said. Treasury securities that give investors protection against higher prices in the economy are “attractive now.”

Pimco is among a growing list of investors who are warning that programs to counter the U.S. slump will increase consumer prices as the economy starts to revive. Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection.

President Barack Obama is asking Congress to pass a budget that will result in a record $1.75 trillion deficit. He has already signed into law a $787 billion package of tax cuts and government spending.

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Jim Sinclair’s Commentary

Every day for the past few weeks the most consistent green figure has been the Libor Rate.

Libor’s Creep Shows Credit Markets at Risk of Seizure
By Gabrielle Coppola and Liz Capo McCormick

March 11 (Bloomberg) — The cost of borrowing in dollars is rising as the global recession deepens and central bank efforts to prop up the financial system fail to prevent a growing number of banks from requiring government bailouts.

The London interbank offered rate, orLibor, that banks say they charge each other for three-month loans stayed at 1.33 percent today, near the highest level since Jan. 8 and up from this year’s low of 1.08 percent on Jan. 14, the British Bankers’ Association said. The Libor-OIS spread, a gauge of bank reluctance to lend, widened to the most since Jan. 9.

Short-term borrowing costs are increasing as banks hoard cash and governments struggle to thaw credit markets after finance companies reported almost $1.2 trillion of writedowns and losses since the start of 2007. Banco Popolare SC yesterday became Italy’s first lender to seek state aid. Lloyds Banking Group Plc, the U.K.’s largest mortgage provider, ceded control to the government March 7. U.S. regulators seized 17 failing banks so far this year.

“The market is beginning to think that the solution is either not politically possible, or we can’t afford it, or maybe there isn’t a solution,” said Bob Baur, chief global economist at Des Moines, Iowa-based Principal Global Investors, which manages $198 billion of assets. Libor’s rise “is just another indication of that concern,” he said.

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Jim Sinclair’s Commentary

IMF sales in the 70s proved the most bullish thing for gold as it allowed major buyers in a singular prices.

Central bank gold sales never see the marketplace. This time they will provide an excellent vehicle for central banks wishing to diversify out of the US dollar.

This is no factor to the price of gold.

European Central Banks May Announce Gold Sales Accord, UBS Says 
By Claudia Carpenter

March 10 (Bloomberg) — European central bankers may extend their so-called Washington Agreement, capping gold sales, with an announcement as early as this month, according to UBS AG.

The accord that caps sales at 500 metric tons a year through September 2009 was announced in March 2004 at a meeting of the Group of 10 nations. A new agreement would most likely keep that 500-ton limit, according to John Reade, UBS analyst.

“If it doesn’t happen this month it could lead to a bit of uncertainty” in the gold market, Reade said by phone today.

Banks sold 358 tons of gold in the fourth year of the agreement through September last year, and another 48 tons through Jan. 7, according to the World Gold Council. There are 17 banks in the agreement, with the Central Bank of Cyprus the latest to join in January, according to the European Central Bank, itself a member.

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UPDATE 1-Singapore’s GIC sees more distress in markets
Tue Mar 10, 2009 2:35am EDT
By Kevin Lim and Saeed Azhar

SINGAPORE, March 10 (Reuters) – An official from the Government of Singapore Investment Corp (GIC) said he expects more weakness in financial markets in the next 12-18 months, and recommended investors hold gold and other safe assets such as government bonds.

GIC, one of the world’s largest sovereign funds with an estimated $200 billion-plus in assets, has invested aggressively in troubled global lenders, picking up multi-billion dollar stakes in Citigroup (C.N) and UBS (UBSN.VX) in late 2007 and early 2008.

There is "systemic capital inadequacy globally", and the world will probably see "three years of a very vicious downcycle," GIC’s director of economics and strategy, Yeoh Lam Keong, told the Investment Management Association of Singapore conference on Tuesday

"This is a very destructive process for assets."

Yeoh, who said he was speaking in his personal capacity, showed a slide prepared by GIC that indicated global writedowns in the financial sector could reach $3.8 trillion by 2013 and that only about 30 percent of the losses had been booked so far.

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Bad news on Sesame Street
Posted by Tracy Alloway on Mar 11 16:54

Sesame Workshop is cutting 20 per cent of its workforce…

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Posted at 2:45 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

The recent nature of these very difficult to read markets make dogmatic assertions out of the question but it appears that gold is resuming its linkage to the Dollar, only this time in the inverse, which is what we have witnessed the vast majority of times since the bull market in gold began back in 2001. Only yesterday gold and the Dollar were moving in lockstep together with both moving lower on the recovery rally in stocks which undercut the need for safe havens in the mind of many traders. It is harder to call today because the equity markets are higher which recently has been resulting in selling pressure surfacing in gold; however, equities are backing down as I write this which usually brings buying back into gold so things are a bit cloudy. Today, the Dollar is sharply lower while bonds are also lower but gold is moving higher. That has Euro gold stabilizing over the 700 level and gold priced in British Pound terms holding above the 650 level. It would be constructive for gold in US Dollar terms if Euro gold and British Pound gold can maintain those respective levels. Keep in mind that it has been gold priced in terms of assorted major currencies, particularly those two, that has been leading the charge higher in the yellow metal.

Technically, gold bounced right off of major support in the $890-$880 level with the upper boundary of that region serving to entice dip buyers. That level also corresponds with the 38.2% Fibonacci retracement level calculated off the November high and the recent low. The 50 day moving average also comes in near that region so as you can see, technically it is a logical level from which to see a bounce higher after the recent selling.

We have the shorter term 10 day and 20 day moving averages headed lower so the bears are still in command until those are taken out and turn back higher. Gold will need to achieve a closing pit session price above $942 to bring back the momentum chasers and give it a shot at trending. For now the range trade looks more likely with support holding. We have to wait to see where resistance surfaces but a look at the charts shows that yesterday’s high and then $930 are reasonable targets to watch.

Back to the Dollar – if the USDX manages to close below yesterday’s low 87.80 it would accomplish two things – it would take out the 20 day closing average and turn the 10 day moving average down. Both are short term bearish signals. The Dollar would still have to close down below the 86.00 level to seriously threaten the longer term uptrend however which still is pointed up.

Crude oil got whacked today and it looks to me like some of those recent long crude/short gold spreads are coming off in large size after the EIA’s storage numbers were released this AM. Needless to say, that data was not particularly friendly for crude which is still trying to mount a breakout to the upside. The bottom looks to be in for crude but whether it can go anywhere is another question. We need to see demand and supply to find an equilibrium point which is apparently what the market is trying to price in and then wait for those eventual supply reductions which will certainly come since so many oil projects have been scrapped due to the low prices. Canadian tar sands need much higher prices to be profitable and many wells across the country are being shut in.

Equities looked like they might actually be going somewhere today but that was until the President made his announcement that he would sign the $410 billion spending bill. Obviously investors and traders were not impressed but then again what’s a few more hundred billion here and a few more hundred billion there in the grander scheme of things, especially when you are talking about trillions.  It is comforting to know that our children and grandchildren are getting such a “bargain”. Oh America –  “Sit tibi terra levis

The mining shares as evidenced by the HUI and the XAU are trading nicely higher having bettered the highs from yesterday which is friendly but they have some techincal work to do before a definite trending move can take place.

Bonds are very close to breaking back down technically and resuming another leg down.

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

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Posted at 12:57 PM (CST) by & filed under Jim's Mailbox.

Jim,

The latest UBS report on gold (Click here to view the report in PDF format) says that it can potentially go to US$2,500/oz.

The exact wording is:

"Using a proprietary econometric model we have generated a probability cone for the future possible price path for gold. Using different environments for the level of inflation volatility, US dollar and absolute level of inflation we have determined that future returns on gold are likely to be positively asymmetric, with potential upside to US$2,500/oz."

They note that gold is a hedge against deflation and inflation particularly if the source of that inflation is loose monetary policy.

They recommend exposure to gold and favor gold shares.

Regards,
Christopher

Hi Jim,

"The Swiss bank, one of the most active gold dealers, warned of "a potential upside of $2,500 an ounce" as some hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks."

This article appears in money.ninemsn.com.au and I thought you should see it.

http://money.ninemsn.com.au/article.aspx?id=769646
For all the latest news around the globe, check out ninemsn.
http://ninemsn.com.au

CIGA Eric

Eric,

This is because UBS spent more time talking about meaningless central bank gold sales. It was that which was put up on Bloomberg every 4.5 minutes from 8:30 AM to and through the end of Bernanke’s speech and pre-screened friendly question interview.

Since the gold guys spend more time looking for why they are wrong the Comex had its way with gold one more time.

Respectfully yours,
Jim

Actual ‘Letter to the Editor’ from the February 5th edition of the Wichita Falls , Texas Times Record News…

Dear IRS,
I am sorry to inform you that I will not be able to pay taxes owed April 15, but all is not lost.

I have paid these taxes: accounts receivable tax, building permit tax, CDL tax, cigarette tax, corporate income tax, dog licence tax, federal income tax, unemployment tax, gasoline tax, hunting licence tax, fishing licence tax, waterfowl stamp tax, inheritance tax, inventory tax, liquor tax, luxury tax, medicare tax, city, school and county property tax (up 33 percent last 4 years), real estate tax, social security tax, road usage tax, toll road tax, state and city sales tax, recreational vehicle tax, state franchise tax, state unemployment tax, telephone federal excise tax, telephone federal state and local surcharge tax, telephone minimum usage surcharge tax, telephone state and local tax, utility tax, vehicle licence registration tax, capitol gains tax, lease severance tax, oil and gas assessment tax, Colorado property tax, Texas, Colorado, Wyoming, Oklahoma and New Mexico sales tax, and many more that I can’t recall but I have run out of space and money.

When you do not receive my check April 15, just know that it is an honest mistake. please treat me the same way you treated Congressmen Charles Rangel, Chris Dodd, Barney Frank and ex-Congressman Tom Daschle and, of course, your boss Timothy Geithner. No penalties and no interest.

P.S. I will make at least a partial payment as soon as I get my stimulus check.

Ed Barnett
Wichita Falls

Jim,

We live in an age marked by stupidity and ignorance even though we have the most advanced technology and means of conveying information ever devised yet by man.

Sitting here watching these dumbasses throwing gold out the window in the midst of what is occurring is something I did not believe men were capable of.

I guess we all learn each day… never underestimate the ability of the American citizen to be so damn dense….

CIGA Frustrated

CIGA Frustrated,

To this all I can add is AMEN Brother.

Jim

 

Jim,

Have you been asked by the decision makers for advice? I guess not as you will tell like it is.

Everyone knows (at least by now) what the truth is but to take the right path is too damn hard to take.

Such brilliance in your analysis and a shame you are not being consulted and then to listen to the garbage from the media experts, talking heads, etc.

I guess the day Man can legislate Conscience it will be the end, but it is impossible.

Another enlightening comment: God created earth, water and air for all the living. Two of them man has been able to legislate – i.e. mine, yours… Air is the only thing man has not been found to be that brilliant to legislate. Just imagine if they could legislate AIR!!

CIGA Shakeel

Dear Shakeel,

It was a great American, Chief Seattle, that asked; "How can you sell air?" Wall Street did. Air is called OTC derivatives.

If governments took only one thing I know seriously, I would hope it is the danger of Pakistan in Taliban hands. That one can change the face of the planet.

Respectfully,
Jim

 

Dear Jim,

I remember seeing many years ago a chart of a cup and handle for gold, it appears we have another one! It looks like gold will double very soon.

Again you look spot on for your target of 1650 on or before Jan 14, 2011!

Best,
CIGA BT

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Dear CIGA BT,

Yes, and there is no power on the planet that can stop this. The consequences of these actions are only a matter of time.

Jim