Posted at 2:20 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

Are you saying that I should wait until sometime in June to buy gold?

Sincerely,
Arlen

Dear Arlen,

Absolutely not. We are in major #3 according to Alf.

The overrun price could be as high as $3500.

The low in June could be from higher levels than today.

Who cares about a few dollars when you might be looking at thousands of dollars of appreciation.

If you are a trader I can’t help you. Ask God, maybe he can shed some light.

Respectfully yours,
Jim

Posted at 10:00 AM (CST) by & filed under General Editorial.

Dear CIGAs,

Of all the items mentioned in the media’s article that was in poor form was their focus on a C$2,000.00 fine paid over a decade ago to the Western Canadian authorities concerning a public release made by my private, not public, company of which I was Chairman.

To best understand the motivation and intrigue with vast implications of this battle, I respectfully request you review the article, “The Men Who Moil For Gold.” This proxy contest personally cost me USD$5,000,000 with 21 attorneys and legal associates in four countries.

Click here to read the article “The Men Who Moil for Gold.”

The result, as in all proxy contests, was to put the company in play, resulting in quite a success.

Counsel prior to release cleared this document, but that is no guarantee that regulators would not decide it was untoward.

What I feel you need to know is that document was in the context of a viscous proxy contest between the private company Sutton Action Committee of which I was chairman and the public Sutton Resources Ltd. of which I remained director.

The event focused upon by the media article was the last item of the finalization of the proxy that included cancellation of seven lawsuits.

My dear departed wife was motivated to do something for the local Kahama district so an agreement was entered into with Barrick Gold for Barbara to finance the building of a USD$1,300,000 hospital at the Bulyanhulu with Barrick agreeing to maintain the hospital thereafter.

Below is a bronze placard that is in the hospital memorializing Barbara’s deep caring for the Tanzanian people.

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This was but one of 18 significant projects Barbara and our daughter undertook with their own funds to recognize the warm welcome and hospitable attitude of the Tanzanian people.

Posted at 11:00 AM (CST) by & filed under General Editorial.

Dear CIGAs,

Because of my deep interest in Tanzania, the following article is for me a great honor.

Tanzanian President seeks US economic cooperation
Saturday 23 May 2009, by Konye Obaji Ori

President Kikwete has visited Silicon Valley to meet with technology giants (CISCO, IBM, Google) to discuss technology growth in Tanzania, he has visited Stanford University to discuss clean drinking water for rural Tanzania, and he has met with president Obama to discuss ways of improving development policy in the fields of health, education, and agriculture, and ways of solving some of the most pressing conflicts on the African continent. Reports claim that he is scheduled to visit international organizations and international financial institutions to discuss the way forward for Tanzania’s economy.

According to reports, the active Tanzanian leader was scheduled to discuss the proposed building of an Information Technology college at the University of Dodoma in Tanzania and the possible laying of a fibre-optic cable in Tanzania with Cisco and IBM. He also met with Google to find ways to speed up development and promote efficiency in Tanzania. In three months from now, Tanzania is expected to establish Seacom, the first of three undersea fiber optic cables which will connect East Africa with Europe.

President Kikwete who is a former military officer and an unswerving supporter of Tanzania’s founding president, Julius Nyerere, on Wednesday recieved an award in Los Angeles for his efforts to improve health on the African continent, and for pushing his administration into increasing the country’s health budget to 11 percent.

The Tanzanian president is the first African Head of State to visit the White House under President Obama’s regime. He sat with president Obama at the white House to discuss the Democratic Republic of the Congo, Darfur, Somalia, the current political situation in Kenya and the ongoing tension between mainland Tanzania and Zanzibar were discussed in the meeting.

Tanzania has not had the type of internal strife that has plagued many African countries, though it remains one of the poorest countries in the world, with many of its people living below the World Bank poverty line, it has had some success in wooing donors and investors. Unlike many African countries, whose potential wealth contrast with their actual poverty, Tanzania has few exportable minerals and a primitive agricultural system.

The Tanzanian President is however commended by observers as doing his bid to continue the good work started by his predecessor (former President, Mr. Benjamin Mkapa) who is credited by the IMF and World Bank as being the driving force behind Tanzania’s extensive economic liberalization, which contributed to the country’s economic growth as well as a considerable drop in inflatio

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Posted at 10:00 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

I have not read a better encapsulation of conditions nor have I seen a better reason to get insured immediately if you are not in gold. If you are not insured, prepare to suffer the extraordinary loss of lifestyle you are accustomed to, if not your existence itself.

Let’s call our writer "CIGA Pedro the Informed."

A View From Abroad by an American in Brazil

We are witnessing the end of a very long phase in history. As a result there is a mass insecurity amongst the dominant nations of the past 300-years that is bordering on hysteria. This insecurity manifests itself in many different ways and markets are reflecting this. Gold prepares to soar, reflecting this insecurity, as gold is a barometer of fear.

Within the English-speaking world it is evident that “foreigners” are to blame. In the UK it is both the Poles and the “Pakis”. In America it is initially revealed via a general population  viewing the Kyoto Protocol as a Chinese-led trick to destroy our economy. Then it is the belief that Mexicans are “invading” and Arabs are trying to kill us all. One has to stop and ask what the root of this paranoia really is.

As the American power structure tries to prepare for “inevitable conflict” with world Islam (c.f. Huntington, Clash of Civilizations) it also tries to hide its obsequious relationship with the Saudi Royal Family, which is incestuous at best, and perhaps more symbiotic than most would want to know. The financial population cannot reconcile this anymore than they can the fact that (perhaps apart from Jim) the accurate, unblended analysis of this crisis seems to have been foreshadowed by a two people with names: Nouriel Roubini and Naseem Taleb. People remain confused by the fact that the American power structure lacks patriotism and seems to favor its own interests over the interests of the country. They lash out at everyone, including, now, their own leaders. People don’t know whether to “blame” Obama’s socialism or Bush’s self-serving capitalism. Their foreign policies seem different but the rest appears the same. Major banks appear to have more control than we thought….even while teetering on bankruptcy.

This is reflected in markets. Currencies gyrate wildly. As Jim has noted many times, anybody trying to fathom the FX markets and trade them is likely to be carried out of the pit on the proverbial trader’s stretcher with a coronary. First the Euro is finished – its break-down elucidating thoughts of its demise – but then the belief that jettisoning the PIGS (Portugal, Italy (Ireland?), Greece, Spain) might be causing it to rise. The markets are schizophrenic. They don’t know what to think. The dollar and sterling take the brunt. There are reasons for this.

This is a system headed for breakdown. The established historical order is drifting to a close, and nothing can stop it. Changes in policy are manifestations of history – alter it they cannot. Gold’s rise becomes inevitable as countries who have ruled the Imperial phase of history try and resist their diminishment in status. Markets are manipulated as they try and hold on to power, while history shifts under their feet. China and Brasil cut deals that don’t include the USA and UK…the UAE starts to view separate currency arrangements with Russia, foregoing overtures by Saudi Arabia for a Gulf wide (GCC-led) monetary regime. Riyadh’s relationship is too close to Washington. Washington is yesterday’s news. (So much for the conspiracy of Islam.)

The end of an era is upon us. That is the era of the Global hegemon. The first phase took place in Britain, the second in the Soviet Union, and the third in America. Fukayama’s theory of history’s end is immolated on its very alter. The debacle of Iraq, as well as Afghanistan stand as testimony. The dominant powers simply cannot draw borders they way  they did at San Remo in 1920 or via the Red-lines which economically created Kuwait. We seem to be unsure if we should break Iraq up, or let it be unified. Is it even our business, or has history out-run us and we have failed to acknowledge it?  As the global hegemon is characterized through the Imperial phase of history, now draws to a close, people stand confused and amazed. The rulers of the dominant nations appear ready to sell them out…and this appears as “news” to educated observers.

Nobody can be sure of any currency regime any longer. The markets gyrate wildly. As fear and insecurity mount, Gold prepares for take off.

Jim Sinclair’s Commentary

I told them this would happen, but only received a note that my personally paid for advertising on the subject of short of gold derivatives selling by producing companies was no longer welcome. This was in the London Mining Journal & Mining Monthly.

The big guys are still stuck with derivatives in the indenture of the development loans as well as on the books.

The egotistic hedge funds have no idea how stupid it is to be short of the up and comers who are "back to basics" and "royaltied."

AngloGold stumbles over hedges

The cost of betting on the gold price is now all too clear, writes Jim Jones

Back in the mid-’90s, when Anglo American’s gold division (AngloGold, as it came to be called) was more or less happy to be a South African company, management strategy was simple. The idea was to hedge about 10% to 20% of annual gold production forward for each of the coming five years. Annual revenues would be protected from a fall in the gold price and, should gold rise, the company would benefit from the rise on 80% to 90% of its output.

The company’s hedge book was then in the region of 100 tons of gold against annual production of about 200 tons.

But international expansion entered the picture. Under Bobby Godsell, AngloGold started heading out of South Africa.

By 1999 that expansion had introduced a sophistication that had lifted AngloGold’s total hedge book to 11.9 million ounces, stretching out 10 years and approaching almost twice the group’s annual production of 6.9 million ounces.

The suits running the show could congratulate themselves because, while the gold price was slipping, hedging gave the company a couple of percentage points on top of the spot gold price — 6/oz when spot gold was averaging 300/oz.

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Jim Sinclair’s Commentary

The mindset of taking your gold home is a factual criterion of gold as insurance.

It is also the first movement of a TRUTH MACHINE because much of the gold, even sold at these levels, is paper gold.

The sale is agreed to, but the seller does not have all or sometimes any of the gold granted to the buyer. Receipts are issued, sometimes even with serial numbers.

Paper gold is purchased as a hedge but only in a ratio determined by the volatility.

As gold is called for in physical form on all levels, even at the COMEX, the true price of gold will emerge.

You can be sure that Hedge Wizard Paulson owns paper gold.

DMCC vault may store region’s gold reserves
By Shashank Shekhar  on Wednesday, May 13, 2009

Much of the region’s gold that has so far been held in London may soon return.

The new vaults of DMCC will be a home to the gold allocated to the Dubai Gold Securities (DGS) Exchange Traded Funds (ETFs). The vault may also become a natural choice for storage of gold reserves by central banks in the regional market, analysts said.

While the gold allocated to DGS is kept at HSBC’s vaults in London, the gold reserves held by GCC’s central banks are held by various other vaults in London, market sources said. Gold vaults have existed in London for more than 150 years.

DMCC’s new vault became operational on April 26 this year. "We want to bring the gold held under DGS ETFs at the HSBC vaults in London to Dubai. What has been holding us back is the difference in gold specification between London and Dubai," a DMCC official told Emirates Business. Until May 11, the total number of DGS traded stood at 15,200. Each security approximately amounts to one-tenth of an ounce of gold.

Though DMCC officials have declined a direct comment on the matter, a spokesperson with the centre said that ample care has been taken to make the vault "better than the others".

Another DMCC official said that the vault will also be used to store precious metals associated with the ETFs that may be launched in Dubai later this year. At a press conference organised recently, senior DMCC officials had disclosed that they plan to launch new "precious metal ETFs" in Dubai. The ETFs will be traded at Nasdaq Dubai, the Dubai-based regional security exchange where the DGS trades.

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Jim Sinclair’s Commentary

All major US social and economic events start on the West Coast, moving quickly East. So will this according to the Formula you received here in 2006.

California faces its day of fiscal reckoning
May 22, 6:25 PM (ET)
By JULIET WILLIAMS

SACRAMENTO, Calif. (AP) – The day of reckoning that California has been warned about for years has arrived. The longest recession in generations and the defeat this week of a package of budget-balancing ballot measures are expected to lead to state spending cuts so deep and so painful that they could rewrite the social contract between California and its citizens. They could also force a fundamental rethinking of the proper role of government in the Golden State.

"The voters are getting what they asked for, but I’m not sure at the end of the day they’re going to like what they asked for," said Jim Earp, executive director of the California Alliance for Jobs, which represents the hard-hit construction industry. "I think we’ve crossed a threshold in many ways."

California is looking at a budget deficit projected at more than $24 billion when the new fiscal year starts in July. That is more than one-quarter of the state’s general fund.

This week, voters said they no longer want the Legislature to balance budgets with higher taxes, complicated transfer schemes or borrowing that pushes California’s financial problems off into the distant future. In light of that, Republican Gov. Arnold Schwarzenegger has made it clear he intends to close the gap almost entirely through drastic spending cuts.

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Posted at 8:00 AM (CST) by & filed under General Editorial.

Dear CIGAs,

So many men and women have sacrificed so much for the freedoms slipping away.

I find this a sacrilege, and a pillaging of their memory.

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Posted at 10:31 PM (CST) by & filed under General Editorial.

Dear CIGAs,

I wish to share with you details of my financing activities within my corporate entity because some media commentary conflicts with my position on the subject.

As many of you know, for over 50 years I have held many prestigious executive positions that required knowledge and personal integrity, only to have my unblemished record questioned by some in the media with dubious agendas. Because of this media whipping, I feel it is necessary to respond to all my friends including this letter from a former consultant to my public company.

Dear Jim,

At last the geological and mining community is being reminded of the benefits of exploring by development – and funded by production. This was a concept, which essentially resulted in some world-class gold mines in Zimbabwe during past years. Many of these started off as a collective of small workings, which amalgamated in time. I refer you to the Globe & Phoenix Mine in the Midlands gold fields – which started off as two separate small workings, and later produced 124 tonnes of gold bullion!

Of interest, I did attempt to express my opinion of the benefits of small-scale mining way back in 2002, a copy of my thoughts at that time is attached, and broadly follows the concept which is well described by Dave Duval. In today’s’ world we are being strangled by the rules and regulations of the Securities Exchange, which refrains junior explorers from raising exploration funding without lengthy 43-101 reports and all the rest of it. I fear that the exploration by development model might only be a model for the self-funded explorers or those investors who believe in the concept and it’s management.

I just thought that I would express a personal opinion on a subject I feel quite passionate about.

Kind regards,
Pete Chadwick

This memo from geologist Peter Chadwick brings me to another subject that certain media outlets and I strongly disagree on.

It has been the strategy of some hedge funds to pummel the prices of junior explorers in order to starve financially this very important segment of the minerals industry. I suggest to you that if you deduct the transactions that underwriters have made as intermediaries between junior explorers and hedge funds called PIPES, there have been practically speaking no underwriters interested in doing business with anyone but major gold producers.

The reason for this is simple. The hedge funds have so depressed prices that underwriters have no investment interest in them at all. For a junior to do a deal with underwriters or directly with a hedge fund on a PIPE basis is to offer their shareholders up as lambs for the slaughter. This covers the fund short but even worse motivates the fund with a guaranteed 15% to continue the short line.

Peter is correct. There is no money for explorers anywhere until they have drilled off both shallow and deep deposits on their exploration holdings. That is a Catch 22 situation because in the main juniors have no money in the first place and individual high net worth investors – unless they are professional investors – lost their interest in the juniors because of the pummeling by the funds.

The short sellers are both legal and illegal. The legal short seller deserves our respect. That person takes a risk based on their negative investment assumptions, even if those assumptions are malformed by their own lack of due diligence.

The tactics used that exposes their presence are as follows:

1. Defined strategy to sell short all good news released by any junior.
2. Always sells the market closes in order to paint the charts of which the Candle Stick method is most susceptible.
3. Ruins the day traders by setting up false intraday signals and collapsing them which is hard to detect on a daily chart.
4. Populates the chat groups with many false nicknames, some for hire, saying the most heinous things about the company and its management.
5. Sometimes publishes more than 500 negative messages daily on various chat lines.
6. Induces some media people to write articles based on their faith in the informant rather than in-depth fact checking.
7. Spreads false and negative rumors by contacting major stockholders to bad mouth the company.
8. Times selling to interim moves in gold on the UPSIDE.
9. Tries to oppress the gold leaders of each group such as Royal Gold in 2005. Remember RGLD was leading the field of all gold shares then. RGLD was abused by media. It was hit in the high teens and dropped into single digits for one month. The stock is now at $45 and is headed, in my opinion, to $80.

This total lack of investment interest in junior explorers resulting from such organized attacks has prompted me personally to contribute $23,500,000 to the coffers of my public company. I have never received shares from any amalgamation, from warrants or from options, and have been buying shares through private placements at or above the market or in the open market itself. My position came from zero percent in the company to the present level of approximately 3%.

Yes, I did make sales in the marketplace from time to time to facilitate my financial liquidity. In doing so, I accrued the bulk of the 22.5% state and federal taxes that I was required to pay out.

All have been reported and can be reviewed both as purchases and sales, open market and direct placements. by going to the company’s website and doing the following;

The convenient links on our website to access are SEDAR and SEDI filings:

– To access SEDI go to www.sedi.ca
– Upper right hand side of page: Click on “Access public filings.”
– Next page – on left hand side of page – click on “View summary reports.”
– Next page – half way down page – see Report titles – click on Insider transaction detail
– Bottom of page – click on Next
– Next page – Identify insider or issuer* – Click on Insider family name – type in Sinclair then James
– Identify date range – enter dates, i.e. January 1, 2000 to May 22, 2009
– Go to bottom of page – click Search
– Next page – Click on View JSINCLA002 James Sinclair Tanzanian Royalty (Note there is another James Sinclair in Ottawa)

All Insider Reporting activities appear, including Estate of Barbara Sinclair transactions (over which I have Control or Direction as a result of her untimely death)

*It is also possible to access all TRE Insider reporting activities – at Identify insider or issuer. Click on Issuer name and type in Tanzanian Royalty and continue as above, and all TRE insider’s reports will be shown.

You can review every transaction from 2004 to present. Transactions from the inception of my association were 2002 to 2004. These were reported to authorities in paper form as it was not computerized then. Anyone wishing to see the paper reporting need only contact me and request copies.

I consider my actions as positive to the shareholders’ interest even if some media interpretations are in disagreement.

Please keep in mind that at age 19 years, I made 35 primary markets successfully for a Chicago/New York Stock Exchange Member firm of which I became a general partner and member of the Executive Committee. When merged into Muller & Company, members of the New York Stock Exchange, I was the sole general partner.

I am a master trader and know how to operate in markets without injuring them, having been taught by Livermore through Seligman.

Posted at 10:26 PM (CST) by & filed under In The News.

Dear CIGAs,

JB Slear tells us that having a few COMEX 100 ounce gold bars in his hands has given him a warm and cared for feeling.

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Jim Sinclair’s Commentary

You have to love how Great Britain’s lack of gold is referred to as a brown gutted reserve.

What more do you need to know? Gold is going to at least $1224 and $1650, here and NOW! Alf says it is going even higher.

Gold bugs at last have their perfect trinity
China has doubled its bullion reserves and left us in no doubt that it will spend more of its $40bn monthly surplus on hard assets rather than the toxic paper of Western democracies.
By Ambrose Evans-Pritchard
Last Updated: 9:36PM BST 23 May 2009

The world’s top hedge fund manager John Paulson has built a gold position of at least $5.5bn, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.

Britain has become the first of the Anglo-Saxon "AAA" club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.

Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co has bought $2.9bn in SPDR Gold Trust, the biggest of the gold exchange traded funds (ETFs), which now holds 1106 tonnes − three times the Brown-gutted reserves of the United Kingdom.

Mr Paulson has also built up a $2.3bn holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a "Paulson Real Estate Recovery Fund", reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play.

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