Posted at 11:04 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Mr. Prechter is back out with his bearish counting. Gartman is also on the bandwagon but looking for a buy slightly under $900, at least now.

Therefore it is time to review another Elliot Wave count, our own Alf Fields who has been spot on since gold started this bull market. The following is his retirement contribution to the gold gang.

Elliott Wave Gold Update XXIII
Alf Field

  • Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
  • Major TWO down from $1015 to $699, say $700 (a decline of 31%);
  • Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
  • Major FOUR down from $3,500 to $2,500 (a 29% decline);
  • Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

Once again, you can pick your number for the gain in FIVE and multiply it by $2,500. The numbers become astronomical and can really only be possible in a runaway inflationary environment, something which many thinking people are suggesting has become a possibility as a result of the actions taken during the current crisis.

Concentrating on the $3,500 target for Major THREE, which is a five fold increase from the low point of about $700, there is a case advanced in "Crisis Cogitations" for a five fold increase in money and prices in order to arrive at a "Less Hard" economic landing. In the USA, total debt recently exceeded $50 trillion and this is unsustainable given an economy with a GDP of only $14 trillion. The suggestion is that the debt level will reduce through bankruptcies to say $35 trillion while the new money created to save the situation will push up the nominal GDP to $70 trillion. A $35 trillion debt level is manageable with a GDP of $70 trillion.

It requires a five fold increase in prices to achieve the above result. Gold has retained its purchasing power over the centuries and will no doubt continue to do so in the current environment. Consequently gold will almost certainly increase five fold (or more) if the level of prices in the USA increases five fold.

In "Crisis Cogitations" it is acknowledged that the current credit/debt deflation could get out of hand and result in a serious deflationary depression. There is debate as to how gold will react in a deflationary environment, but the fact is that in a serious depression bankruptcies will be rife and price levels will decline. This may result in cash and Government bonds performing better than gold, but this is not certain. Gold cannot go bankrupt and is thus an asset that people can hold with confidence in a deflationary depression. It is possible that demand for a "safe haven" investment may be large enough to cause the metal to perform better than cash or Government Bonds.

The odds, however, strongly favour an inflationary outcome. Given a strong will and the ability to create any amount of new money via the electronic money machine, it seems a foregone conclusion that runaway inflation will be the end result. If Mugabe could do it in Zimbabwe, there seems little doubt that Ben Bernanke and his associates in other countries will have no trouble in doing it too.

Why quit writing these reports?

I have noticed from the emails that I receive that many people are using these reports to guide their trading activities in gold. I have had no objection to this in the past, but feel that it would be foolish to trade gold in the circumstances of the Big Kahuna crisis that we are living though at the moment. It has become a question of individual financial survival in an environment where things are happening more rapidly and with increasing violence. I feel very strongly that it is time to quietly hold onto one’s gold insurance and not attempt to trade it. I do not wish to provide interim levels that may cause people to be encouraged to trade their gold to skim a few extra fiat dollars or other currencies, but lose their gold as a result.

So it is Good Bye, Good Luck and God Bless,

Alf Field
25 November 2008
Comments to: ajfield@attglobal.net

Posted at 10:05 PM (CST) by & filed under In The News.

Dear CIGAs,

This is where we are headed:

clip_image001

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

Dollar Fundamentals Versus Dollar Chart Painting:

Let us say that Chicago’s potential bank failure is high and only 15 banks fail in every major metropolitan area. That is one dickens of a lot of failures to come. Now this is really horrible for the US dollar so what is going on? Demand for dollars provided by the Fed to bail out the world will come to an end. China and other central banks will fill the demand created by the chart painting of whale sized hedge funds. the dollar fundamentals get worse and worse. Think what happens when the whale sized hedge funds get on the short side of the dollar, which in time they will.

That will make Alf right on the gold price.

Head of MB Financial says 25-30 local banks could fail
By Becky Yerak | Tribune reporter
4:41 PM CST, March 3, 2009

One of the Chicago market’s leading lenders says it’s "very possible" that 25 to 30 banks in the Chicago area could end up failing.

MB Financial Inc. of Chicago last Friday bought certain assets and deposits of Glenwood-based Heritage Community Bank, a 92-year-old institution shut down by regulators, and MB Chief Executive Mitchell Feiger said Monday that the "transaction is a good example of what’s coming."

"The pace of bank failures is going increase, and, in fact, I think it’s going to be very high," Feiger said during a conference call Monday about the deal.

"Say if 10 percent of banks in the country fail, which I think is a very possible number, and proportionally 10 percent of the banks in the Chicago area fail, which I think is a very possible number, then 25 to 30 banks in the Chicago area will fail," he said. "There will be more opportunities like this one." Feiger didn’t identify any banks he thinks could be on the brink.

About 300 institutions insured by the Federal Deposit Insurance Corp. do business in the Chicago area.

MB has assets of about $8.8 billion. MB agreed to buy $219 million in assets from Heritage at a discount of $14.5 million. MB said it entered into a loss-share transaction with the FDIC providing MB with "substantial protection" for loan losses.

More…

 

Jim Sinclair’s Commentary

This has been low profile on CNN and Bloomberg.

CHINESE BOUGHT MORE CARS THAN AMERICANS
Posted in free trade by emsnews on March 3rd, 2009

As worldwide car sales drop like a rock, interesting things are now showing up in the statistics.  It is not what you are but where you stand, relative to others.  This month, China just passed a new road sign: more cars were sold in China than in the US.  This is very important: we no longer control world consumer markets.  It is moving East.  Japan refused to be a world market and looked only to enrich the top 10% so Japanese car sales have been declining for a decade or more.  But with the massive Chinese population indulging in this, it means the fall of world oil prices will cease and the US will begin seriously competing with the Chinese for gasoline.

More…

 

Jim Sinclair’s Commentary

Many of you have no interest in the following. I do. I have an indoor pistol range in my home. It is 65 feet long and takes 800 cubic feet of air down the shooting tube every minute, and can handle up to 50 calibre. I have targets made up of SIVs. Maybe my hobby is an endangered species. Maybe we are an endangered species. Today in Washington it is starting to look like it.

HR 45 Blair Holt Firearm Licensing & Record of Sales Act of 2009.

For your Information basically this would make it illegal to own a firearm – any rifle with a clip or ANY pistol unless:

•It is registered
•You are finger printed
•You supply a current Driver’s License
•You supply your Social Security number
•You will submit to a physical and mental evaluation at any time of their choosing
•Each update – change or ownership through private or public sale must be reported and costs $25 – Failure to do so you automatically lose the right to own a firearm and are subject up to a year in jail.
•There is a child provision clause on page 16 section 305 stating a child-access provision. Gun must be locked and inaccessible to any child under 18.

They would have the right to come and inspect that you are storing your gun safely away from accessibility to children. Not doing so is punishable by up to 5 yrs. in prison.

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.45:
http://www.opencongress.org/bill/111-h45/show
http://www.govtrack.us/congress/bill.xpd?bill=h111-45

 

Jim Sinclair’s Commentary

Here is an interesting concept, but first let’s put it in perspective:

  • $9.5 Trillion could pay off 100% of all the mortgages in the USA.
  • $9.5 Trillion could pay $1400 to every person on planet earth.

If all American families saved from losing their homes please stood up,

the silence would be deafening.

The means of knowing what has really happened is the standard method of detective work. FOLLOW THE MONEY.

Jim Sinclair’s Commentary

Here is your percolating next major crisis.

Welcome To PBGC

PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.

More…

Jim Sinclair’s Commentary

The certain to come bailing out of pensions guarantees hyperinflation.

General Electric:

On this one, I told you so. They have not marked down their OTC derivatives, but if they fail to mark down their auditors will not sign off on their audit. They are coming clean on at least $24 billion lost, possibly up to $60 billion as another giant bites the bailout dust.

Hyperinflation is guaranteed by OTC derivatives.

 

 

Jim Sinclair’s Commentary

This is a growing danger that in time will threaten the entire area.

Sri Lankan Cricket Team Attacked In Pakistan, Eight Killed
March 3, 2009 5:09 a.m. EST

Lahore, Pakistan (AHN) – At least eight people were killed and six members of the Sri Lankan cricket team were injured in a shooting attacked in the country’s eastern city of Lahore on Tuesday, police said.

Unknown attackers riding on motorbikes opened fire on Sri Lankan cricket team bus near Gaddafi Stadium, according to reports.

Two civilians and six police officers who were guarding the players were killed in the attack, which happened as the team was heading for the third day’s play in the second Test against Pakistan, a police official confirmed.

Sri Lankan cricket manager Brenden Kurrupu said up to five or six players were believed to have been wounded.

Among the injured players are K Sangakkara, Ajantha Mendis and T Samaraweera, a TV channel reported quoting Pakistan Cricket Board (PCB) officials.

More…

Jim Sinclair’s Commentary

This the weakest link internationally.

Pakistan’s drift into the hands of extremists
The intention of the attack on Sri Lanka’s cricket team was to send a clear message to Washington: Pakistan is ungovernable
Tariq Ali
guardian.co.uk, Tuesday 3 March 2009 10.32 GMT

The appalling terrorist attack on the Sri Lankan cricketers in Pakistan had one aim: to demonstrate to Washington that the country is ungovernable. This is the first time that cricketers have been targeted in a land where the sport is akin to religion. It marks the death of international cricket in Pakistan for the indefinite future, but not just that, which is bad enough. The country’s future is looking more and more precarious. We do not know which particular group carried out this attack, but its identity is hardly relevant. The fact is that it took place at a time when three interrelated events had angered a large bulk of the country and provided succour to extremist groups and their patrons.

The first is undoubtedly the foolish decision by Washington (backed by Britain) to send more troops to Afghanistan, which has now united all those resisting them in that country and the North-West Frontier province of Pakistan. Instead of searching for a viable exit strategy, Obama has gone for a surge. On several occasions, I have warned that escalating the war in Afghanistan could seriously destabilise Pakistan and its army.

Second, Senator Dianne Feinstein’s revelation that the US drones being

used to target "militants" and "terrorist havens" inside Pakistan were, in fact, being despatched by the US from military and air-force bases inside Pakistan (obviously, with the approval of the Pakistani military and civilian leaders) created mayhem in the country. The shock and dismay should not be underestimated. Half-hearted government denials further fanned the flames. Since many in the country regard Zardari and his cronies running the country as US drones, the anger was multiplied.

Domestically, the country is a mess. The People’s party has learnt and forgotten nothing. Corruption is rife and stories circulate linking the money being paid by bankers directly to the president’s house. Add to this Zardari’s refusal to honour an election pledge restoring anindependent judiciary, and his decision to manipulate tame judges to disqualify his opponents has not gone down well. The controversy was aggravated by Zardari’s move to dismiss the elected government in the country’s most populous and strategically important province, the Punjab (capital: Lahore), and impose direct rule, after its chief minister apparently refused to accept a bribe in the shape of a lucrative business deal in return for abandoning the fight to restore the chief justice fired by the military leader over a year ago.

More…

Jim Sinclair’s Commentary

Few, if any, realize the danger of Pakistan in the hands of the Taliban.

Killings, kidnappings jeopardise Pakistan Swat truce

PESHAWAR, Pakistan (AFP) — A fragile ceasefire in Pakistan’s insurgency-hit Swat valley was hanging by a thread Tuesday after two soldiers were killed in an ambush and suspected Islamists kidnapped two local officials.

Pakistani troops and Taliban fighters traded accusations about violating a two-week ceasefire in the northwest former ski resort — ripped apart by a brutal insurgency waged by Islamist hardliners trying to enforce Islamic law.

The soldiers were escorting a water tanker in Swat valley’s Matta district when a group of militants fired on them, a security official told AFP.

In the ensuing gunfight, which lasted about an hour, three soldiers were wounded, the official added on condition of anonymity.

"Two of the injured soldiers died later at a medical facility," the official told AFP on condition of anonymity.

"The militant attack is a clear violation of the peace agreement. The security forces are exercising restraint and complying with the accord," the military said in a statement.

More…

 

Jim Sinclair’s Commentary

Here comes the greatest of problems due to how deeply it will anger people, both those on pension, those about to get pensions and all those workers counting on retirement some day.

Where the public is concerned this is more powerful than Wall Street Fat Cat bailouts farce.

Pension bombs going off
By: Paul Merrion March 02, 2009

Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area’s biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

Boeing Co.’s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don’t turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.

Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.

More…

Jim Sinclair’s Commentary

1. Israel makes a serious misjudgment.

2. Pakistan goes Taliban.

3. Turkey becomes a victim

Turkey-Iran Relations: A Trade Partnership or a Gateway for Iran to Escape International Sanctions?
Publication: Eurasia Daily Monitor Volume: 6 Issue: 41
March 3, 2009 11:34 AM Age: 10 hrs
By: Emrullah Uslu

While the international community has been discussing whether Iran finally has the technological capacity to produce nuclear weapons, the diplomatic traffic between Turkey and Iran has been increasing. In addition to Iranian President Mahmoud Ahmadinejad’s visit to Turkey, nine meetings at the ministerial level were held in 2008 (December 20, 2008).

Iranian Foreign Minister Manouchehr Mottaki emphasized the energy deals between the two countries and said that "the train of bilateral relations is moving in a good condition" (Tehran Times, July 20, 2008).

It seems that the diplomatic traffic between the two countries will continue to increase in 2009. In January Ali Larijani, the president of the Iranian parliament, went to Turkey and met with Turkish President Abdullah Gul and Prime Minister Recep Tayyip Erdogan (CNNTurk, January 13). Moreover, the year 2009 has been designated as "Iran-Turkey Culture Year" (Cihan News Agency, August 21, 2008). Joint cultural activities have already been organized in Turkey. Marmara University and the Iranian Consulate in Istanbul, for example, have arranged an "Iran-Turkey Cultural Relations Conference" (IRNA, January 19, 2009).

More…

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.

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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.

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