Posted at 11:38 AM (CST) by & filed under Jim's Mailbox.


Updated 04/09

"The Formula"

US Fiscal Balance vs. US Dollar: Federal Government Budget As A % of GDP, 12 Month Moving Average:

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

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

"Leading Formula"

Federal Taxes Withheld (TW) Less Total Government Outlays (TO) As A % of GDP, 12 Month Moving Average.

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

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

Federal Taxes Withheld 12-Month Moving Average (TW12MA) AND Federal taxes Withheld 12-Month Moving Average Year-over-Year Change (TW12MA12LN)


Dear Jim,

A burning question I hope you may be able to address for all CIGAs is:

Can the dollar hold at .52 or do you see it falling to 10c or even 1c Zimbabwe-style?

Golden Light J.

Dear Golden Light,

The dollar can hold .5200 if the Federal Reserve Gold Certificate Ratio is adopted as I have outlined along with Volcker’s long standing program that has so far been ignored to all but forgotten degrees.

However, what Bankster (who own all of Washington) has done anything beneficial for people in your recollection?


Hello Jim,

I have just viewed the video from the compendium.

What a delight! It was a privilege to allow us into your home for your presentation.

There is a honorable approach to your teachings… you take the "teach a man to fish" approach.

Please make this an annual event.

Kind regards,

CIGA Chris
Melbourne, Australia

Dear Chris,

Why should we wait a year?

My feeling is if there are changes or acceleration of trends, we will again meet at my place via video.

Protect yourself, please.


Posted at 5:43 PM (CST) by & filed under General Editorial.


My Dear Friends,

Under USDX .8200 the wheels of hyperinflation start turning.

Under USDX .7200 the impact of hyperinflation is visible to anyone who can see.

Under USDX .6200 the Quantitative Easing madness hits the fan

Under USDX .5200 Zimbabwe economics now being practiced become a US dollar condition moniker.


Respectfully yours,

Posted at 4:25 PM (CST) by & filed under Jim's Mailbox.


U.S. Dollar Index and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

A breach of the relative swing high suggests the formation of another 1 formation. This is consistent with controlling the dollar’s descent. Lower dollar equals higher gold prices. Sooner rather than later, the money flows in the gold market will have to reflect the developments in the U.S. dollar Index market.





The deficit would be 12.9 percent of GDP this year, the biggest since World War II.

US red ink rising even higher, to $1.8T
By ANDREW TAYLOR, Associated Press Writer Andrew Taylor, Associated Press Writer

WASHINGTON – The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates. Budget office figures released Monday would add $89 billion to the 2009 red ink — increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.


Just as a comparison, the German government forecasts the deficit at about 3.9 percent of GDP this year (above the European budget deficit ceiling of 3% of GDP).

Bundesbank sees German budget deficit about 6 pct in 2010
11-MAY-2009 13:15

FRANKFURT, May 11 (Reuters) – Germany’s budget deficit will soar to around 6 percent of gross domestic product (GDP) next year and could spark disciplinary action from the European Commission, the Bundesbank said on Monday.

The German central bank said the country’s public debt ratio could rise to about 80 percent in the next two years as a result of lower revenues and higher spending to combat the recession.


CIGA Christopher

Dear Jim,

This screams of your "Formula" again in spades!



US red ink rising even higher, to $1.8T
Associated Press Writer

WASHINGTON (AP) — The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates.

Budget office figures released Monday would add $89 billion to the 2009 red ink – increasing it to more than four times last year’s all-time high as the government hands out billions more than expected for people who have lost jobs and takes in less tax revenue from people and companies making less money.

The unprecedented deficit figures flow from the deep recession, the Wall Street bailout and the cost of President Barack Obama’s economic stimulus bill – as well as a seemingly embedded structural imbalance between what the government spends and what it takes in.


Dear BT,

You haven’t seen anything yet. Unemployment is arithmetic but the impact on the deficit is geometric.

God help us all if this new flu is as serious as some say. The deficit could go as high a $7 trillion. Do the math.


Posted at 3:59 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

You think something is out of whack here?

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Dear CIGAs,

The US T Car is to be introduced as the 2009.7. Note the steering wheel is on the British side but can be simply handed to the passenger and is therefore marketable anywhere.

The rear is held up by spin and hot air. All payments with be hedged by an OTC derivative issued by AIG. Every vehicle will be stress tested before issue. These vehicles will not be permitted in Greenwich, CT for obvious reasons.


Jim Sinclair’s Commentary

Add to this that the recent Pakistan surge has displaced half a million Pakistan people. They see American tanks, armored vehicles and helicopters on the move while the Taliban sell the message that at Washington’s behest Muslims are killing Muslims. There has to be a better way as this way has failed repeatedly.

Texas Straight Talk
On Af-Pak: Stop "Helping"

While much of the country’s attention is on other issues, a serious situation is developing in Pakistan that threatens to plunge us into another fruitless and bloody war.  It is very frustrating to see that many who were so vehemently against the wars of the last administration have suddenly lost interest in foreign policy simply because we were promised change.

Those still paying attention know that nothing could be further from the truth.  Very little has changed, except perhaps rhetoric, but what does that matter when the bombing missions are only getting deadlier?  Rather than drawing down violent military interventions into the affairs of other countries, the new administration is escalating the foreign policy of the previous administration.

In Pakistan that entails the continuation and even escalation of military interventionism just across the border with Afghanistan.  The targets are believed to be enclaves of Taliban militants, however, many innocent civilians have been caught in the deadly crossfire, severely damaging our image in the region.  Many ordinary Afghanis and Pakistanis that never had cause to take up arms against us are being provided with motivation as family and friends are killed and maimed by our clumsy and indiscriminate bombs.  Is it worth it for us to be involved in this way at such a high cost of blood, treasure and goodwill?  Is there anything to be gained by this policy?

We are helping the Taliban and other enemies to actually gain numbers and strength, while driving them down from the mountains in the border regions deeper into Pakistan, where they have been making a menace of themselves.  As our bombings follow them, beleaguered villagers have little choice but to leave their homes and join the swelling numbers of refugees or take up arms and join the fight against us.  

Nonetheless, instead of recognizing the cascading unintended consequences of trying to deal with Pakistan’s problems, all signs in Washington point to further escalation.  Both the House and Senate have newly introduced bills to triple foreign aid to Pakistan, from $500 million to $1.5 billion, with every indication that the leadership in Pakistan is taking advantage of the situation with the Taliban to milk more aid from the US taxpayer.  We are broke.  This is money we don’t have, and it is an insult to the American people to run up the national credit card for this type of military adventurism after many Americans thought they were voting for peace.

The bottom line is our involvement in Pakistan’s internal problems is not making us safer.  In fact, we are adding to the numbers of our enemies and increasing the threats to our security here at home.  We are inciting the very terrorism and extremism we are trying to stop.  Every dollar we send, even if it is for humanitarian purposes, frees up resources to make war and potentially prop up unpopular leaders.  The factions and politics of the Middle East are irrational and dangerous.  We play with fire when we meddle in their affairs, and we isolate ourselves diplomatically by making more enemies than friends.  We need to bring our troops home, end all foreign aid, and maintain a neutral stance on the world stage.  It, in fact, is the only foreign policy we can afford right now, and it would gain us more friends and trading partners than our bombs ever could.  Besides, that’s what the Constitution permits and our founders strongly advised.



Jim Sinclair’s Commentary

Remember the Chairman making a great deal about the Inspector General’s review of the Fed when asked if the Fed’s

actions were audited by any significant oversight body?

Please take time to see the depth and breadth of this significant expert body oversight who clearly knows all there is know about every transaction entered into at the Fed.

This should shut you up about the lack of transparency and audits.

Jim Sinclair’s Commentary

Around and around it constantly goes and where it stops, nobody knows.

Official: U.S. To Replace Top General In Afghanistan.

Pentagon replaced its top general in Afghanistan Monday as President Obama tries to turn around a stalemated war.

Defense Secretary Robert Gates said he asked for the resignation of Gen. David McKiernan. Gates said new leadership is needed as the Obama administration launches its strategy in the seven-year-old campaign.

The change is aimed at "getting fresh thinking, fresh eyes on the problem," Gates told a Pentagon news conference.

The move comes as more than 21,000 additional U.S. forces begin to arrive in Afghanistan, dispatched by Obama to confront the Taliban more forcefully this spring and summer.


Jim Sinclair’s Commentary

Just to further strain whatever is left of our mental powers, Bloomberg just announced a really good thing. The money bunny was smiling from ear to ear.

Banks to help Zombie Borrowers

Now we have the Dance of the Zombies – Zombie banks to lend to Zombie borrowers.

Jim Sinclair’s Commentary

Pakistan to the USA: send $1.5 billion, it is chump change anyway. Stop asking questions!

Pakistan Won’t Disclose Location of Nuclear Weapons To US
May 10, 2009

Pakistani President Asif Ali Zardari said his country isn’t adding to its nuclear arsenal and doesn’t have to disclose the location of its weapons to the U.S.

Pakistan is “not adding to our stockpile as such,” Zardari said today on NBC’s “Meet the Press” program. “Why do we need more?”

Asked whether Pakistan would tell U.S. intelligence officials where all its nuclear weapons are located, to allow for a joint strategy to keep them secure, Zardari said Pakistan is a sovereign country.

“Why don’t you do the same with other countries yourself?” Zardari said in the interview taped May 7. “I think this is a sovereignty issue, and we have a right to our own sovereignty.”

President Barack Obama said last month that, while Pakistan’s civilian government is “very fragile,” he is confident that the country’s nuclear arsenal is secure. He also said that Pakistan’s military is taking the threat of internal enemies seriously and recognizes the hazard of nuclear weapons “falling into the wrong hands.”


Jim Sinclair’s Commentary

Lahore? Now let me think. No, Lahore is not held by the Taliban.

Shaky Pakistan Is Seen as Target of Qaeda Plots
Published: May 10, 2009

WASHINGTON — As Taliban militants push deeper into Pakistan’s settled areas, foreign operatives of Al Qaeda who had focused on plotting attacks against the West are seizing on the turmoil to sow chaos in Pakistan and strengthen the hand of the militant Islamist groups there, according to American and Pakistani intelligence officials.

One indication came April 19, when a truck parked inside a Qaeda compound in South Waziristan, in Pakistan’s tribal areas, erupted in a fireball when it was struck by a C.I.A.missile. American intelligence officials say that the truck had been loaded with high explosives, apparently to be used as a bomb, and that while its ultimate target remains unclear, the bomb would have been more devastating than the suicide bombing that killed more than 50 people at the Marriott Hotel in Islamabad in September.

Al Qaeda’s leaders — a predominantly Arab group of Egyptians, Saudis and Yemenis, as well as other nationalities like Uzbeks — for years have nurtured ties to Pakistani militant groups like the Taliban operating in the mountains of Pakistan. The foreign operatives have historically set their sights on targets loftier than those selected by the local militant groups, aiming for spectacular attacks against the West, but they may see new opportunity in the recent violence.

Intelligence officials say the Taliban advances in Swat and Buner, which are closer to Islamabad than to the tribal areas, have already helped Al Qaeda in its recruiting efforts. The officials say the group’s recruiting campaign is currently aimed at young fighters across the Middle East, North Africa and Central Asia who are less inclined to plan and carry out far-reaching global attacks and who have focused their energies on more immediate targets.


Jim Sinclair’s Commentary

Unemployment’s real figures, considering the number of people who have used all the unemployment benefits, it touching 16%. Call it the next challenge only because the focus is not there now. It is another disaster already in progress.

Next challenge for banks: Credit card losses
Number usually tracks unemployment, but this time it may be worse
By Eric Dash and Andrew Martin
updated 4:40 p.m. MT, Sun., May 10, 2009

It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one more reason that rule of thumb no longer holds. For many lenders, losses are now outpacing layoffs.

Mr. Ward lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked if he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”

In the meantime, he said, “I’m just doing what I can.”

Even if Mr. Ward can pay off his debts, experts predict that tens of thousands of Americans will not be able to, leaving a gaping hole at ailing banks still trying to recover from the housing bust.


Posted at 8:06 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The following is Alf Field’s Gold price predictions:

We are presently in Major Up Move Three.

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)



Posted at 3:31 PM (CST) by & filed under General Editorial.

Dear CIGAs,

This is a dedication to all the Mothers, prospective Mothers, and to my beloved Barbara on Mother’s Day.

Without our Mothers what would we be?

No influence is as powerful as that of the mother. We are only strong if our Mothers remain strong.

Respect your Mother. Respect your Wife.

Show them both how much you care not only today, but every day!


Posted at 3:17 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Take warning. There is no Bull equity market with legs on Armstrong’s time table yet.

Merrill’s Rosenberg: Goodbye, Thank You, Yes It’s Just A Sucker’s Rally
Henry Blodget | May. 9, 2009, 9:06 AM

Merrill’s economist David Rosenberg left the firm yesterday (planned for several months).  And he went out swinging.  David has maintained from the beginning that the recent rocket rally off the lows is just a suckers’ rally, and he reiterated that view as he walked through the doors.

Some excerpts from his swan song, which was published Thursday:

Market likely to peak the end of the week [Yesterday].  Just as the clock is winding down on my tenure at Merrill Lynch, the equity market is winding up with an impressive near-40% rally in just nine weeks. For those that were still long the equity market back at the March 9 lows, a good ‘devil’s advocate’ exercise would be to ask yourself the question whether you would have taken the opportunity, if the offer had been presented, to have sold out your position with a 40% premium at the time. What do you think you would have said back then, as fears of financial Armageddon were setting in? We haven’t conducted a poll, but we are sure at least 90% of the longs at that point would have screamed “hit the bid!”

Are we at risk of missing the turn? Fast forward to today, and within two months optimism seems to have yet again replaced fear. Are we at risk of missing the turn? What if this is the real deal – a new bull market? This is the question that economists, strategists and market analysts must answer.

Risk is much higher now than it was 18 weeks ago.  The nine-week S&P 500 surge from 666 at the March lows to 920 as of yesterday has all but retraced the prior nine-week decline from the 2009 peak of 945 on January 6 to the lows on March 9. We believe it is appropriate to put the last nine weeks in the perspective of the previous nine weeks. To the casual observer, it really looks like nothing at all has happened this year, with the market relatively unchanged. But something very big has happened because the risk in the market, in our view, is much higher than it was the last time we were close to current market prices back in early January, for the simple reason that we believe professional investors have covered their shorts, lifted their hedges and lowered their cash positions in favor of being long the market. 



Jim Sinclair’s Commentary

For your information.

US swine flu overtakes Mexico’s as number of American cases soars to almost 3,000
The number of confirmed swine flu cases in the US has soared to 2,254, with 104 people in hospital, as the outbreak spreads around the world.
By Philip Sherwell in New York
Last Updated: 11:19AM BST 10 May 2009

There are another 700 presumed cases in the US which has overtaken Mexico, the epicentre of the outbreak, for confirmed infections after a “backlog” of laboratory tests was released. More than 4,000 people have been made ill in 29 countries, with at least 51 deaths.

The virus killed a woman in the Canadian province of Alberta, making it the third country to report a death. The unnamed victim, who was in her 30s and died on April 28th, had not travelled to Mexico but had other health problems, doctors said.

Canadian food officials also said that they suspect a herd of pigs in Alberta had been infected by a farm worker who had recently returned from Mexico in what would be the first case of human-to-swine transmission.

The death raised the confirmed global toll to 51 – 48 in Mexico, where three new deaths were reported in Saturday, and two in US border towns in Texas.

“Today there are almost 3,000 probable and confirmed cases here in the United States,” the CDC’s Dr Anne Schuchat told a news briefing. “The good news is we are not seeing a rise above the epidemic threshhold in that system.” Cases have been reported in 43 of the 50 states.

The confirmed number of new infections in Mexico, where the new mutant strain was first reported, rose from 1,204 to 1,578 as it sets up own facilities to run tests.



Jim Sinclair’s Commentary

Who enforces this, the Sheriff of Nottingham, NY?

Let’s hear a round of applause for the Greenwich, CT OTC derivative manufacturers and distributors who hold total karmic responsibility. This is a debt that will not be bailed out. They have changed a normal modest two to four year recession into a financial disaster that will probably be the biggest of all written and oral history. When they did it they had to know this would happen.

New York City Starts Charging Rent at Homeless Shelters
Updated 12:24 PM EDT, Sat, May 9, 2009

Even the homeless can’t escape the high price of a night in New York City.

City officials this month began charging rent to working families staying in public homeless shelters.

The policy stems from a 1997 state law that hasn’t been enforced until now. Under that law, shelter managers started to require families to pay a portion of their income, depending on the shelter and family size, according to  The New York Times. Residents could be expected to pay up to half their earnings.

Some shelter residents say the new rule will ruin their chances of saving enough money to get an apartment.

One single mother living in a Manhattan shelter tells the Times she got a letter saying she had to give up $336 of the $800 she makes each month as a cashier. Vanessa Dacosta makes $8.40 an hour at Sbarro. She got a letter under her door at the shelter a few weeks ago saying she’d have to fork up nearly half of what she was bringing in.

For Dacosta, who pays nearly $100 a week on child care for her 2-year-old, paying the shelter is hardly an expense she can afford.

“It’s not right,” Dacosta told the Times. “I pay my baby sitter, I buy diapers, and I’m trying to save money so I can get out of here. I don’t want to be in the shelter forever.”

But the city says it’s got to find a way to cover the costs of state housing aid. Officials had to pay back $2.4 million in 2007 that they said should have been paid by residents of homeless shelters who could afford it.


Jim Sinclair’s Commentary

He who has the surpluses and increasing gold holdings will overtake those that have lost the will, honor, courage and determination to be first.

Money is made today by destruction, not building, by fraudulent paper made good rather than morality in commerce.

China overtakes the US as Brazil’s largest trading partner
China has become Brazil’s most-important trading partner, disrupting a relationship between the United States and the Latin country that stretches back to the 1930s.
By Malcolm Moore in Shanghai
Last Updated: 9:57AM BST 10 May 2009

Welber Barral, the Brazilian trade minister, said total trade between Brazil and China had amounted to $3.2bn (£2.14bn) in April, representing a near twelve-fold increase since 2001.

The sum was greater than the $2.8 billion of imports and exports to the US and represented the second consecutive month that China had topped the trade table.

“It is a historic moment,” he said, adding that he expected China to remain in pole position for the rest of the year because its economy is still growing healthily. “China is now a platinum account [for Brazil],” said Douglas Smith, a Latin American economist for Standard Chartered bank.

The US has been Brazil’s principal trading partner for nearly 80 years, but a sudden surge in Chinese demand for Brazilian iron ore in the first quarter of this year dislodged the Americans.

The news is the latest sign of China’s increasing challenge to US hegemony in Latin America. China has been steadily increasing its sphere of influence and has become particularly close to the four “Red” South American countries: Venezuela, Bolivia, Ecuador and Peru.


Jim Sinclair’s Commentary

Let’s not forget those that have lost everything and have now fallen out of the social net of unemployment insurance. That is the real unemployment number, not the bull the liars pose.

Think of their anger and disgust as media pumps out the good news of a supposed slowing of the problem when they cannot find jobs no matter how much they try. They are forced to do part time or off the books jobs at a slave’s wage. This probably pleases Daddy Warbucks.

This suffering means nothing to the dancing TV clowns and Bloomberg Money Bunnies that welcome us to the new bulls**t bull market.

This is disgusting in its greed. This is evil in its disdain for the suffering multitude.

How about GM shutting down more plants?
How about Dupont further cutting staff?
How about Microsoft further cutting staff?
What if the Chrysler surgical bankruptcy becomes a regular bankruptcy?

Damn those bondholders of Chrysler who are pursuing their contractual rights. Who do they think they are?

Actual U.S. Unemployment: 15.8%

This morning’s news that U.S. unemployment has hit 13.7 million, pushing the rate to 8.9 percent, tells only half the story of this recession.

The total number of Americans who are not working full-time but ought to be is actually about 22 million, or 15.8 percent, according to the Bureau of Labor Statistics.

Who are those other 8.3 million Americans? Call them the unofficially unemployed.

As The Ticker points out each time the Bureau releases the monthly unemployment figure, it does not include many out-of-work Americans.

There are many reasons for this.

The bureau, which is under the Labor Department, cannot use unemployment compensation records to count the out-of-work, because they are not reliable or up-to-date enough. The bureau also cannot count every out-of-work person.

Instead, as The Ticker reported here in December: “In the case of the monthly jobs report, the Labor Department contacts 60,000 households to determine the unemployment picture for the entire workforce, which consists of about 154 million Americans.”