Posted at 3:40 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Another week – another rotten day in the broad equity markets. Alas – you began so well last evening! What is it that ails thee? Wherefore doth thou persist in sinking lower and lower? Those might be the questions being asked by traders who saw the overnight trade in the equity futures moving sharply higher on the “good” news that the feds would only take over 40% of Citi instead of 51% or more. Sure – that was a great reason to buy. Traders began looking at the rise and saw another opportunity to get short from a better level and down it went.

I have to say that it is evident to me that the market has lost all confidence in the current administration’s point men on the economy and their “plan” to turn things around. You have to begin to fear that we could very well see an even sharper acceleration in the equity selloff based on the way the market is acting. This thing sticks its head up and the axmen come in and quickly lop it off. That kind of price action is terribly bearish. Confidence, that elusive, ethereal substance, once lost, cannot be recaptured until something occurs which gives solid evidence that it is sufficient to avert the crisis and quite frankly, many are looking for it and cannot find it.

Incidentally, the DOW is now back to levels last seen in October 2002. If it moves a bit lower from that level, it will be trading at levels last seen in October 1997! Another way of saying this is that all of the paper gains for the last 11 ½ years in the DOW are now smoke.

I heard what I consider a most intriguing idea put forth by a Republican Congressman out of my state Texas. He suggested that if the government feels compelled to try to do something to stem this crisis, why not simply declare a national tax holiday period of two or three months, perhaps even more, in which all withholding taxes are no longer taken out of American workers’ paychecks. In other words, let them keep the full amount of their wages. Couple that with a reduction in the corporate tax rate that levels the playing field between American business and our overseas competitors. His point made eminent sense to me. If the government is going to go into hawk, why not do so by letting the people keep the money that they have earned. Imagine what folks would think once they actually realized how much the government pilfers from them even week, or other week or month only to then spit it away on more useless pork? The problem with that idea is that it makes it almost impossible for the special interest block voters to be bribed by those who love to be the distributors of others money.

Meanwhile, the Euro, after rising sharply overnight (Yippee –let’s hear it for “risk” trades once again) got a case of heartburn or perhaps more aptly, sickness associated with being in high places, and promptly collapsed lower in the New York trading session as “risk” trades went back out. Seriously folks, it is a gigantic waste of time even attempting to come up with explanations for the price action we are having to witness in so many of these markets. It is called hedge fund madness. Plow back in buying with both fists only to abandon ship diving headlong into the water the next minute. When the dust settles most of the hedge funds will no longer be in existence. Good riddance is my attitude. Maybe some of their managers will find shoveling asphalt or screeding concrete on the new “shovel-ready” projects more fitting to their disposition to shove things around without any particular attention to patterns. Then again if word got out among the construction crew who they were, some of them might end up as road filler so perhaps they might want to avoid calling any attention to themselves.

Gold was taken quite a bit lower last evening as the thirst for risk came back meaning appetite for gold was out. It did manage to recapture most of its losses during the day session as it dawned on many traders that nothing the feds were going to do was going to effect any sort of quick recovery and that the time for risk is not perhaps as near as some might have been thinking.

Technically, the dip buyers are active in the gold pit which is a positive not to mention the price action in the gold shares as indicated by the HUI and XAU which both managed to withstand a great deal of selling pressure coming from the price drop in the broader equity markets.

Short term oriented traders used and are using the $1000 price level to book some profits since that was a target that some were looking for but longer term oriented players are using any weakness to get in or increase positions. This is actually good price action. As I mentioned Friday, this is one of the two possible scenarios I outlined. A panic rush into gold that would see it shoot up $55-$75 or more a day is in no ones interest. Those moves, while extremely sharp and massive, fizzle out in a collapse. We want to see a sustained, measured, steady move higher which consists of periods of consolidation in which the market adjusts to the new price level and has some time to acclimate itself to the new supply/demand equilibrium. A move such as this, has long-lasting staying power. While parabolic blow off runs can be fun for traders who catch the long side, they are extremely tricky because they collapse so quickly that very few can exit in time to keep most of their profits. Also and more importantly, holders of the physical metal are usually not of the nature that they are sitting there watching a parabolic blow off run with their car keys in their hands waiting to rush out of the door of their home to head down to the local coin shop to cash in. Such folks have bought and are holding the metal to protect themselves from what they see heading their way and they do not intend to part with the metal without a great deal of evidence to convince them that things have turned for the better.

Volume in last Friday’s Comex session was strong with an increase in the open interest of about 6600 contracts. The data suggests strong short covering was also met with fresh selling by the commercials once again alongside of the increase in the fund long position.

Goldman was the largest stopper once again in the February Comex Gold contract delivery process – most interesting to say the least.

Friday’s commitment of Traders data showed us the norm – funds buying with commercials selling but I should also note that a large number of the funds were adding fresh short positions, almost 5,000 to be exact through Tuesday of last week. Needless to say, those positions are history now as they are deeply underwater or were covered at a loss, which is the more likely scenario.

Bonds were down sharply overnight on the gain in the equity and the rush toward “risk” trades. They reversed course and are in the plus column now as I write this with the sell off in the equity markets continuing unabated.

Crude is back down after settling a bit above $40 on Friday trading near the $38.50 level. Nat gas recaptured the “4” handle. Platinum traded lower but managed to stay above the $1000 level. Palladium also was lower but is still above $200.

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


Posted at 8:39 PM (CST) by & filed under In The News.

Dear CIGAs,

Have you protected yourself?

90-Year-Old Madoff Victim Back at Work
Thu Feb 19, 10:31PM ET

A 90-year-old Calif. man has been forced to abandon his retirement after losing all his life savings in the alleged Madoff Ponzi scheme. Ian Thiermann lived through the Great Depression and says he’ll get through this financial crisis too.

Click here to watch the video…

Jim Sinclair’s Commentary

The following is for those of you that puh-puh the concept that massive hedge funds only need to recall that allegedly Mr. Soros ran a raid of the Asian currencies that not only killed them but also threw most of Asia at one time into a deep recession.

The idea that major hedge funds do not have enough money to move currency markets, especially the Cando, Swiss and Kiwi, borders on beyond silly.

Paul Volcker: The banking world needs more Canadas
Posted: February 17, 2009, 1:15 PM by Kelly McParland

Paul Volcker, the former U.S. Federal Reserve Board chairman who is now a member of President Barack Obama’s advisory team on the economy, spoke in Toronto recently as part of the Grano Speakers series.

His topic, of course, was the extent of the crisis facing the U.S., and particularly what brought it about. (Solving it is another issue). He is the latest to suggest  Canada is in far better shape, and has been far better served by the structure of its banking system, than the U.S., Europe and other regions.

"It’s interesting that what I’m arguing for looks more like the Canadian system than the American system," Volker said, pointing to strong banks focused on traditional commercial banking practices — taking in money and providing credit — that operate separately from the high-risk financial highwire acts that brought down Wall Street, and for which Volker has little respect.

Here is the speech in full:

I really feel a sense of profound disappointment coming up here. We are having a great financial problem around the world. And finance doesn’t work without some sense of trust and confidence and people meaning what they say. You take their oral word and their written word as a sign that their intentions will be carried out.


Jim Sinclair’s Commentary

It is officially "Out of Control." Are you in control?

Soros sees no bottom for world financial "collapse"
Sat Feb 21, 2009 4:19pm EST

NEW YORK (Reuters) – Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.


Jim Sinclair’s Commentary

And Hedge Funds, how dare they?

EU leaders back sweeping financial regulations
By PATRICK McGROARTY, Associated Press Writer – 1 hr 10 mins ago

BERLIN – European leaders backed sweeping new regulations for financial markets and hedge funds at a summit Sunday in Berlin as politicians and nations scrambled to tame the global economic crisis.

German Chancellor Angela Merkel hosted heads of state and finance ministers from Europe’s largest economies to try to establish a common European position on economic reforms before an April 2 summit of the Group of 20 nations.

"All financial markets, products and participants including hedge funds and other private pools of capital which may pose a systematic risk must be subjected to appropriate oversight or regulation," Merkel said in a statement released on behalf of the summit members, following the talks.

Top officials from Britain, France, Germany, Italy, Luxembourg, Spain, the Netherlands and Czech Republic agreed on seven key points during their one-day meeting in Berlin, the statement said.

"A clear message and concrete action are necessary to engender new confidence in the markets and to put the world back on a path toward more growth and employment," Merkel said.

But the call for blanket global regulation was sure to be resisted by the financial industry and may not be entirely welcomed by other members of the G-20, which in addition to European nations includes the United States, China, Japan and developing nations like India and Brazil.



Jim Sinclair’s Commentary

Back in the 1960s the US courts at the request of the US IRS embargoed the assets of Union Bank of Switzerland, looking for US tax evaders.

A GRAND JURY was called, apparently to intimidate any US person found to have made transfers of monies or negotiable securities to Switzerland. UBS at that time was prepared to sacrifice their US assets to protect their clients. The Grand Jury questioned many accounts of people who had moved to Switzerland, had dependent family living or going to school there, did legitimate overseas business, and people who had committed no crime at all. All uncovered transferees were called to the Grand Jury.

What is interesting here is the question of why do so many nations keep their gold at the New York Federal Reserve Bank?

World War Two is over.

In World War Three the battlefield is everywhere.

Swiss party wants to punish U.S. for UBS probe
Sat Feb 21, 2009 9:53am EST

ZURICH, Feb 21 (Reuters) – The right-wing Swiss People’s Party (SVP) called on Saturday for retaliation against the United States over a U.S. tax probe into the country’s biggest bank UBS that threatens prized banking secrecy.

The populist SVP, the country’s biggest party, said Switzerland should not take in any detainees from the U.S. prison for terrorism suspects at Guantanamo Bay in Cuba, which the Swiss government said last month it could consider to help shut the camp down.

Switzerland should also reconsider its policy of representing the United States in countries where it has no diplomatic presence, the parliamentary SVP said in a statement.

The SVP said gold stored by the Swiss National Bank in the United States should be repatriated and Switzerland should ban the sale of U.S. funds in the country to protect Swiss investors after the failure of U.S. regulators.

The SVP has one minister in the seven-member Swiss government which is made up of the biggest four parties, but its populist policies have shaken up usually consensual Swiss politics.


Jim Sinclair’s Commentary

Recall our advice here on JSMineset.

To those of you that do not have financial privacy, under no circumstances and certainly not via the internet should you seek to accomplish secrecy. You will neither get privacy or your money back, nor will you own any gold anywhere.

You will get a visit from your Inland Revenue Special Agent.

Yes, those that went early are not among the 19,000, the 52,000 nor in the undertow of the pirates of the Caribbean.

Antigua pledges to cooperate on bank investigation
By Clifford Krauss
Sunday, February 22, 2009

ST. JOHN’S, Antigua: Having seized control of Robert Allen Stanford’s two banks in recent days, Antiguan government officials are now pledging to work closely with U.S. regulators to investigate their offshore banking system, long suspected by U.S. officials of being a center for laundering money from around the region.

"We need to investigate our own backyard to see if it needs cleaning up," Attorney General Justin Simon said during an interview.

That acknowledgement came as a break from statements only last week by local bank regulators that the financial system was absolutely clean even as the U.S. Securities and Exchange Commission accused Stanford of engaging in an $8 billion fraud involving high-yielding certificates of deposit sold by an offshore bank here.

A run on both the onshore and offshore banks Stanford operated in Antigua began last week after a U.S. judge froze the assets of Stanford Financial Group, the Houston-based company through which the offshore bank sold the certificates. U.S. investigators are examining the possibility that Stanford was involved in a Ponzi scheme.

Concerned that the Antiguan economy, which is already hurting from a downturn in tourism due to the global economic crisis, could suffer further from a financial breakdown, government officials have taken actions that are unprecedented for the country’s largely unregulated banking system.


Jim Sinclair’s Commentary

The real question is who will tell Kucinich to stand down.

Kucinich: Who Told SEC to "Stand Down" on Stanford Probe?
Chairman of Domestic Policy Subcommittee Opens Inquiry
Washington, Feb 20 –

Chairman of the Domestic Policy Subcommittee, Congressman Dennis Kucinich (D-OH) today sent a letter to Ms. Mary Schapiro, Chair of the Securities and Exchange Commission (SEC) requesting documents that could reveal which government agency told the SEC to "stand down" rather than take enforcement action against the Stanford Group in October 2006 as has been reported by the New York Times.

Recent media reports have indicated that the SEC was aware of improprieties at Stanford Financial Group as early as October 2006, but withheld action at the request of another government agency.

In a report published in the February 17th edition of the New York Times, an SEC official said that an inquiry had been opened on Stanford in October of 2006.  According to the Times report, an associate regional director of enforcement said the SEC "stood down" on its investigation as a result of the intervention of another federal agency.

Stanford is now the focus of an $8 billion fraud investigation and, presumably, an earlier inquiry would have spared many Stanford investors and triggered similar inquiries into other funds which lacked transparency.

"The SEC’s recent filing against Stanford stemmed from the 2006 SEC inquiry that had been apparently shelved at the request of the unnamed agency.  If this is true, we must find out why the SEC delayed enforcement, and if there were other cases where other government agencies intervened to block enforcement,” Chairman Kucinich said.

"If the SEC did indeed begin an inquiry in 2006 and was called off by another agency, our subcommittee will demand that the SEC reveal the name of that agency which told it not to enforce federal laws which protect investors," said Chairman Kucinich.


Jim Sinclair’s Commentary

This is going to open a can of political worms as it deals with the nefarious takeover of Mexico in process and nearing completion.

"While Mexico’s current narco war, which has claimed 7,000 lives in two years, has been billed as one "between cartels", it is, on the ground, something closer to an anarchic scramble between street-level gangs to whom dealing and smuggling have been "outsourced", while the Gulf Cartel and its peers concern themselves with a takeover of the Mexican economy and all-out war against what is left of the Mexican state the cartels do not control."

FBI investigates possible links with Mexico drug gang
Ed Vulliamy and Paul Harris in New York

The FBI is probing possible money laundering linked to Mexico’s infamous narco-trafficking Gulf Cartel in its investigation of Texan billionaire Sir Allen Stanford, US law enforcement sources have told the Observer.

An FBI source close to the investigation would not give exact details but confirmed the agency was looking at links to international drug gangs as part of the huge investigation into Stanford’s banking activities. Reports in the US have said Mexican authorities have detained one of Stanford’s private planes as part of an investigation into possible links to the Gulf Cartel. It has been alleged cheques found inside the plane were linked to the cartel, which is one of the most violent criminal organisations in the world.

Sources in the US Drug Enforcement Administration also confirmed that while the investigations into Stanford’s affairs were "with the FBI and Securities Exchange Commission, there may well have been a trail connecting his Mexican affairs to narco-trafficking interests. So far as we understand from information partially in the public domain, this has pertained to the Gulf Cartel, and items found aboard a private light aircraft. I think we’ll find that any possible drug-related trail and SEC priorities are not all in the same frame."

Asked whether the aircraft seizures were an isolated incident in the overall investigation, the official said: "It’s not going to be as if they would check every plane. Any connections to the narcos would have been followed for some time, and US law enforcement has been working with Mexico’s banking regulators on a vast range of investigations, including Stanford’s interests, for some time.

"This would not be the first investigation like this following trans-border investments to lead to narco-traffic interests."


Jim Sinclair’s Commentary

A Sunday closing?

Oregon-based Silver Falls Bank closed by FDIC
2/22/2009 9:17 AM  ET

(RTTNews) -  Silver Falls Bank, based in Silverton, Oregon State in the US is the latest bank to be closed by the US Regulators, falling prey to the deteriorating financial turmoil in the world’s largest economy, the US. This is the 14th bank to be closed by the US Financial Regulators in this year.

On Friday, the Oregon Department of Consumer and Business Services closed the Bank and named the Federal Deposit Insurance Corporation, or FDIC, as the Receiver. As as is the case with regard to closure of financial institutions, public have not been intimated through advance notice regarding the closure of the Silver Falls Bank.

The FDIC has stated that at the end of February 9, Silver Falls Bank had $131.4 million in assets and $116.3 million in deposits. Heavy dependence on commercial construction loans, which, of late, have been not performing or turned bad, forcing the FDIC to acquire the bank.

Another Bank in the Oregon State, Citizens Bank of Corvallis has agreed to assume deposits from Silver Falls Bank.

FDIC further stated that all the three offices of Silver Falls Bank would open on Monday, 23 October 2009, and conduct normal business activities in the name of Citizens Bank. The automated teller machines will be functioning normally and the customers need not panic, the FDIC added.


Jim Sinclair’s Commentary

What OTC derivatives do not do to the financials, attorneys will.

Whatever is left is going to leak out due to lousy business.

Only when accounting rules are altered to allow the banks to fabricate new false asset values will their fortunes change as the markup of worthless garbage to fake values produces earnings.

Big banks set to report on first quarter amid a rising tide of anxiety

TORONTO — Now that the bosses of Canada’s big banks have had their pay haircuts for 2008, how are they doing so far in 2009?

Investors will find out this week and next, as the Big Five report on the first quarter of their banking year which began in November.

Expectations are muted, given the state of the economy and the results will suffer by comparison with year-ago profits.

But at the same time investors are wondering whether Canada’s banks – solidly capitalized and in rude health compared with their shrivelled competitors in the United States and Europe – will fling aside caution and snap up assets at rock-bottom prices.

"This is probably the one opportunity in history for Canadian banks to stand out from their global peers," Bank of Nova Scotia analyst Kevin Choquette declared in a recent survey.


Posted at 6:35 PM (CST) by & filed under General Editorial.

Dear Jim,

I want to thank you for being a true guide. Last year I bought Gold at $992 and it promptly dropped like a rock. I was astonished at such the huge drop! You comforted and assured me that the price of Gold would go to $1200 and yesterday it crossed the $1000 mark again. After a year I am in the green once again! Thank you for your confident and steadfast guidance.

Secondly, I just listened to the interview that Bloomberg conducted with you and I want to thank you for your well… control of the subject and the marvellous conducting of yourself! I loved your final answer, it was well concluded when you said "ask me questions and I will tell you the truth"! The truth you told.

Jim, now that gold has breached the $1000 mark again do you think they will attack gold once again and drop it to $650? As I recall, one time you mentioned that gold can drop by a range of $100-350.

Are we now on the path to $1200?

Will governments nationalize banks? if so, is there any good to that?

Much thanks to you.

CIGA Marylo

Dear Marylo,

Thank you for your note. In answer to your questions:

1. Gold has now declared itself as targeting $1650. That is FACT.

2. Banks in bankruptcy will be nationalized as the "too big to fail" are rescued and the rest that are "too small to care about," all end up property of number one. The final result will be mega financial companies controlling it all. Not a bad plan for those at the top of the Pyramid of Power.


Posted at 2:37 AM (CST) by & filed under General Editorial.

Dear CIGAs

We are now offering Version #2 of our Gold Compendium for sale in the United States and internationally for an all inclusive cost of $US80.

The Compendium is comprised of two discs. The first is a DVD which includes a comprehensive segment on gold by the master himself, Jim Sinclair. The second is a CD containing approximately three years of searchable, archived material from the JSMineset website that was not previously available for online viewing.

A special one hour workshop DVD is included that reviews all the most important criteria for safe passage through these most difficult times.

The compendium has thousands of articles concerning financial protection, markets and specific detailed price predictions.

The package is a roadmap to safety and how to book on surviving Wall Street bailout, Madoffs and the hard times here now and to come.

The following clip is the lead in to the workshop DVD session.


We are looking at various cost efficient payment options for the Compendium, details of which will be announced by month end. In the meantime, we will accept checks for the Compendium made out to: "Jim Sinclair’s Video Account." Please mail your check for $US80 (US dollars only please) to the following address:

Jim Sinclair’s MineSet,
93 Benton Hill Road,
Sharon, CT 06069

Email Enquiries:

Posted at 11:08 PM (CST) by & filed under General Editorial.

Dear Friends:

I was interviewed this morning by Bloomberg Radio on gold. Click the link below to listen to the Podcast. Please note this interview will only be available for 1-2 weeks for people who do not subscribe to Bloomberg.


Click here to listen to Jim’s Bloomberg interview…


There were some key questions that I am reporting to you from memory. It will be most interesting if these items are on the link as I answered them correctly and truthfully.

David Malpass, formerly senior economist for Bear Stearns, says there are additional asset categories to implode. He named racehorses, fine antiques, paintings and gold.

Bear Stearns is not the highest of recommendations at this time. David, wake up. Gold is a currency, not a commodity.

The index of credit default derivatives is saying that Austria looks bad credit wise.

There is more danger in the Credit Default Derivative index than there is in Austria debt.

Do you really believe that those who are today issuing credit default derivatives have properly hedged those transactions so as to be able to perform? The answer is they cannot, as Austria does not have enough trading bonds outstanding to accommodate that hedge.

We should stop picking on the low cap European currencies. The credit problem is the amount of credit in question as a percentage of the GDP.

Face it, everyone is in trouble. The larger the country, the greater the problem.


There were many other questions and answers, but If I am not invited back the above qualifies me for the, “Let’s not tell the truth" hook.

Posted at 6:05 PM (CST) by & filed under General Editorial.

Major Gold miners lose money!

Major gold producers are showing losses with increased cash flow. This is being blamed on weak base metals. That is bullshit. They have sold huge amounts of gold at significantly lower than market prices which according to International and Canadian GAAP must be charged against the projects they have been initiated for. As such, the net earnings are severely reduced by these losses. when the gold is not delivered but the losses must be recognized, cash flow would rise while the net dropped sharply.

All the international projects that are relatively new will report operations at significant deficit in the country where the operation is These same project will show inexplicable increases in the cost of mining which in fact is the loss on the toxic short of gold OTC derivative.

Jim Sinclair’s Commentary

The third time above $1000 means $1650 and I believe that Alf will take the award for being most correct.

The following is the schedule for Gold.

Gold will try $1060.
Then $1224.
Then $1650.

U.S. Sues UBS For 52,000 More Client Names

Following up on Wednesday’s post (UBS Agrees to Pay $780m and Disclose Clients to Settle Tax Fraud Case):  the Justice Department has sued UBS, seeking the identities of 52,000 Americans who used the bank to shelter income from the IRS.

· DOJ Press Release

· Petition to Enforce John Doe Summons

· Declaration of Barry B Shott (Deputy Commissioner (International), Large & MidSize Business (LMSSB) Division, IRS)

· Declaration of Daniel Reeves (Internal Revenue Agent & Offshore Compliance Technical Advisor, Small Business/Self Employed Division, IRS)

· ABC News

· Bloomberg


· Dow Jones

· New York Times

· Reuters

· USA Today

· Wall Street Journal

· Wealth Report

· WebCPA


Jim Sinclair’s Commentary

Recall my email to those of you that have requested that service entitled "Officially "Out of Control""?

Had these people subscribed to this free service not only would they have been prepared long ago, but they would not be bailing out the catastrophic losses to try and prepare.

‘Armageddon’ Trade In Treasury Futures
By Howard Packowitz

CHICAGO (Dow Jones)–Investors seeking safe havens to park their money found some comfort Friday by bidding up for U.S. interest rate futures contracts.

Traders’ outlook was so bleak for the banking sector and the broader economy that some market participants prepared for worst-case scenarios, or "protection against Armageddon," said Jeff Horwich, rate futures broker for TJM Investment Services.

In five-year Treasury futures, market participants said a rare and unusually large options trade was performed in case the interest rate falls below 0% in the second half of this year.

"It doesn’t seem conceivable that futures are going to move into negative interest rate territory," said Rob Kurzatkowski, futures analyst for optionsXpress.

Market participants said a bank, perhaps on behalf of a customer, bought 50,000 June call options at the 225-00 strike, or underlying futures price.

That’s almost 108 points above where June five-year Treasury note futures traded Friday and is equivalent to a negative interest rate.

Holders of call options either believe or are hedging against the chance that higher prices and lower expected rates.

"They’re strictly insurance trades," said Kurzatkowski.