Posted at 3:50 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Gold priced in terms of Euros once again set a new all-time record high at the London PM Fix at €719.199. Clearly, European-based gold buying is very, very strong right now.

The commodity currencies, the Canadian, Australian, and New Zealand Dollar, were all higher in today’s session as were many commodities notably the grains, unleaded gasoline and natural gas. Palladium kicked back above the $200 level while platinum remains a bit below the $1000 level trading near $990.

Around mid-session, news hit the wire that the feds were considering suspending or modifying the mark-to-market accounting rules which had forced banks to value the stuff on their books at market prices instead of their computer model prices. Wall Street loved it and immediately began buying up shares of the financials which firmed the entire equities markets and put a bid back into many commodities. Interestingly enough, both copper and lumber went down – not exactly an encouraging sign for those looking for signs of a bottom in housing.

Gold began moving off its highs on the news as the safe haven bid for the metal then began to dry up. The idea is that if the banks can fudge the numbers on their books then they can present much improved balance sheets to observers and thus restore confidence to the market which in turn will supposedly lead to a loosening of credit and improved lending activity. I am not saying I agree with this but just remarking about how it is being viewed. All I know is that I sure wish it was that easy for me to improve my financial picture by arbitrarily assigning a value to my assets. “What are you worth Trader Dan?” “I don’t know – what do you want me to be worth and I will make it so”.

I am not sure where this is going to go but for today at least, it is the talk of the town.

The technical result of all this as concerns gold was that after it had charged all the way back to strong resistance at that stubborn $920 line, the potential accounting change news emboldened the shorts and spooked the longs and down and back away from that level it receded once again. Ditto for the shares as indicated by the HUI and the XAU which fell back from the top of their trading range once again. The move further away from support down near $890 is constructive but gold has still been unable to get a strong move through $930, which is what it will take to set up the next leg higher. For now it remains in a consolidating pattern with an upward bias.

Gold is trading firmly above all of the major moving averages with the 10 day proving to be good support. All of those moving averages are trending solidly higher. The RSI is still not yet in the overbought zone so there is potential for further upwards action should bulls have the wherewithal to push it higher.

The accounting news also pushed the Dollar back down and moved the Euro back into positive territory as risk was back in once again with the Japanese Yen getting the snot beat out of it. The Yen could collapse quite rapidly if this risk mentality sets back in again. Maybe the jobs number tomorrow which is expected to be quite poor will firm it back up again but since that number is already widely expected to be a stinker, it will probably take an extremely poor reading to undo the mild euphoria surrounding the change in accounting rules. All I know is that there are a helluva lot of spec longs piled into the Yen and it could be quite a bloodbath in there if the sentiment towards it shifts. Those of you who want to trade that thing, should be prepared for extreme volatility. You could get hurt very badly if you are not very, very quick.

Gold deliveries for February were worse than terrible – they were non-existent. In other words, there were ZERO deliveries assigned for today in the February contract. That should make the thieving gold shorts at the Comex quite pleased. Nothing like signaling defeat to your enemy and boosting their morale.

Open interest levels are still remarkably low considering the levels at which gold is trading. We are at 346,000 compared to a peak above 593,000 and gold is $85 away from the $1,000 level.

As a side note, dairy farmers are experiencing a horrendous time right now and many are not expected to see their businesses survive the winter. Milk prices  have plunged below the cost of the production for many of them with reports that some are losing as much as $200/head. That is terrible news and my heart goes out to these hard-working folks who rise early each morning and endure the ins and out of this very difficult industry in which to survive. They have no choice but to begin culling their herds if they hope to weather this horrific storm. A pox on the damn bankers and monetary authorities along with the politicians who created this disaster for the rest of us. Where’s the bailout money for these family owned businesses who are the backbone of this nation? Oh yeah, I forgot – that is reserved for the pond scum who got us into this mess in the first place.

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


Posted at 1:20 AM (CST) by & filed under In The News.

Dear CIGAs,

The following is CIGA Lyn’s volunteer crew practicing for the Hedgie hunt and subsequent feasting.


Because of the gigantic machine that is government, there cannot be a great deal of difference because of one man. President Obama has gathered so many "old School" thinkers about him that there is little, if any, room for imaginative thinkers that could possibly come up with innovative solutions.


Jim Sinclair’s Commentary

Now this is king of the bears. Note Bloomberg’s disavowal at the end of the article.

U.S. Housing Slump Has ‘Just Begun,’ Says Forecaster Talbott

Feb. 5 (Bloomberg) — Let’s say you own a $1 million home in Santa Barbara, California.

The house seemed like a steal when you bought it with that adjustable-rate mortgage in 2005. You still love the white beaches and those yachts bobbing up and down in the harbor.

Then you awaken early one morning, troubled that your monthly payments will soon double. You go out to pick up your newspaper and see for-sale signs on five houses on the street. One identical to yours just sold for $500,000.

Are you going to pay the bank $1 million plus interest for your place? John R. Talbott, a former investment banker for Goldman Sachs, poses that hypothetical question in his latest book of financial prophesy, “Contagion.”

His answer: “I don’t think so,” he says. “If I’m right, then this housing decline has only just begun.”



Jim Sinclair’s Commentary

Recall who called Crude at $100 plus when it was laughed at.

Goldman Sachs lifts gold price forecast to $1,000/oz
Thu Feb 5, 2009 12:55am GMT

SINGAPORE (Reuters) – Investment bank Goldman Sachs raised its forecast for the price of gold to reach $1,000 an ounce in the next three months from its previous forecast of $700 due to rising investor demand for safe haven assets.

"The gold price rally has been driven by surging demand for gold in all forms: physical gold, exchange-traded funds (ETFs), and futures contracts as investors seek ‘a safe store of value’ amid the financial distress and inflation risks," it said in a report.

It also noted that a strong relationship betwween the price of gold in U.S. dollars and the exchange rate of the dollar against other currencies has begun to break down. Gold was trading at $903.15 an ounce by 0038 GMT, down $1.70 from New York’s notional close.


Justin Oliver


Not the Justin Oliver you were looking for?


Jim Sinclair’s Commentary

Seen any hedgies lately?



Dear CIGAs,

The general equity markets are trying to stage a rally. If the SEC would reinstate the uptick rule, maybe a 1930s rally in a bear market could occur. Let’s see if Mrs. Shapiro is a light in a very dark tunnel or if it is business as usual.

Jim Sinclair’s Commentary

Come on you guys out there with the money, get out of paper gold and get into the real fight.

Today Trader Dan said:

"A side note – deliveries in February have so far been disappointing when compared to December 2008. Only a bit more than 200,000 ounces of gold have been stopped compared to 1.17 million after the first 4 delivery days back with the December contract. That is not going to help dislodge the strangle hold that the bullion banks have on the Comex."

Nobody can complain about the Comex guys picking your pocket every day as long as gold is not taken delivery of from the Comex and moved out of their warehouse. The Comex cannot stop gold from going to $1650 and then on to Alf’s number as a product of the choice between public unrest and hyperinflation, a currency event.

All the Comex manipulators can accomplish is a move of the gold price backwards six feet after it has gone forward ten. This will happen on a constant basis until one day it blasts up and out by hundreds of dollars.

Jim Sinclair’s Commentary

The connected can do no PUNISHABLE wrong!

The best investment of a million dollars has not been in any business, stock, or commodity, but in past political donations.

That speaks tomes about where the dollar and all fiat currency is really headed and were gold is finally destined to be.

Madoff Outrage: Whistleblower Testimony Rips SEC
Rich Edson
Tuesday, February 03, 2009

The Madoff whistleblower, Harry Markopolos, has finally and publicly detailed his nearly eight-year investigation into Bernard Madoff — a period in which Markopolos said he feared for his life.

“If Mr. Madoff was already facing life in prison, there was little to no downside for him to remove any such threat,” said Markopolos’ testimony. “We did know, however, that he was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

Markopolos provided detail evidence to the Securities and Exchange Commission from 2000 to 2008 and said there was an abject failure by the regulatory agencies, said his testimony.


Jim Sinclair’s Commentary

The connected can do no PUNISHABLE wrong!

The best investment of a million dollars has not been in any business, stock, or commodity, but in past political donations.

That speaks tomes about where the dollar and all fiat currency is really headed and were gold is finally destined to be.

Madoff Outrage: Whistleblower Testimony Rips SEC
Rich Edson
Tuesday, February 03, 2009

The Madoff whistleblower, Harry Markopolos, has finally and publicly detailed his nearly eight-year investigation into Bernard Madoff — a period in which Markopolos said he feared for his life.

“If Mr. Madoff was already facing life in prison, there was little to no downside for him to remove any such threat,” said Markopolos’ testimony. “We did know, however, that he was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

Markopolos provided detail evidence to the Securities and Exchange Commission from 2000 to 2008 and said there was an abject failure by the regulatory agencies, said his testimony.


Jim Sinclair’s Commentary

Regardless of "Safe Haven," and whatever the fancy flavor of the month is, the US dollar will be ruled by the size of the US Federal Deficit, the condition of the US TIC report and US Trade Balance.

Algorithms distort everything. The new to-be TA gang get their pockets picked regularly.

In the end economic law rules. Economic law says that the US dollar will break the neckline of the huge Head and Shoulders being created in the US Trade Weighted Dollar and tank the US dollar all to hell.

This is no different than the flavor of the month that had the US dollar 30 year bond at 147.

There is no other possibility.

Big Deficits and a Weaker Dollar
by Michael S. Rozeff

Hyperinflation in the U.S. hasn’t happened for quite some time. The last two instances that come to mind are confederate money in the 1860s and the continentals in the 1770s. In both these cases, governments used inflation to finance wars because their tax systems were weak.

A strong tax system (from the government’s perspective) has several aspects. It has a large productive capacity that it can tax without causing production to decline by a great deal. It can enforce tax collections. The required taxes are low compared to the overall government spending.

The U.S. tax system is not weak, but it is weakening. The productive capacity is difficult to evaluate, but it too has probably weakened. The U.S. economy has a large government sector (at least 40 percent) that is relatively inefficient. It also interferes with and distorts the private economy. The federal government has not been able to finance its spending by current taxes in a long time. Instead it has resorted to borrowing (deficit spending) and inflation. The results are a large national debt and a depreciating currency.

U.S. government financing has weakened further in the past year. The government is borrowing very heavily to pay for such actions as the absorption of Fannie Mae and Freddie Mac, bailouts of AIG and large banks, and the rest of the Troubled Assets Relief Program. A short while ago, the government sent out $160 billions of dollars of tax rebates. Meanwhile the Fed has, on its own and with government cooperation, vastly increased credits to the private economy. This has dramatically inflated the monetary base.

The prospects for further tax cuts and higher government spending are bright. In particular, the federal and state governments have made large promises in Social Security and Medicare that, if carried out, mean much higher future government expenditures. These cannot be financed by higher taxes, as they would be too high and crimp production. This spells greater deficit spending, which in turn raises the prospect of higher inflation. In fact, the Fed has already begun to buy more securities in the open market. This "monetizes" debt or creates base money that allows banks to increase lending if they so choose.


Jim Sinclair’s Commentary

The choice will come in the form of a political decision to redo the Kent State incident OR hyperinflation, a currency event. Count on hyperinflation, a currency event under the present administration and legislative. What decision do you think Barney will make?

Revolt Spreads Across the Globe as "Crisis" Continues to Unfold
Unrest rocks the streets of China, France, Russia, Mexico, and elsewhere. And it is spreading…
By Nathan Coe, GNN
Published: Wednesday February 4th, 2009

“They say that the fires of revolt will spread everywhere, and we see acts like damage to bank branches or state buildings and claims of solidarity with the Greek rioters.”

After numerous European governments expressed fear that the unrest in Greece would spread to neighboring countries and perhaps around the world, the spreading global revolt has taken on another tone: that of confronting the elite for their manipulation of the economic “crisis” (which is really a systemic collapse) in order to consolidate yet even more wealth as the masses of the world suffer the brunt of the former’s greed. The spirit of the Greek revolt has not been forgotten, however, for it is clear whose interests the police serve and protect (as America was recently reminded in Oakland).

As Iceland became the first country to fall due to popular revolt against the economic elite, and then proceeded to elect their first female PM, who is also openly gay, things are heating up around the globe. Recently, over 1,000 protesters assembled illegally to protest the World Economic Forum in Geneva, Switzerland, and while the protests were overwhelmingly peaceful, fear of unrest prompted the police to systematically target and arrest known and identified militants and revolutionaries.

As GNN’s Grady reports, in China “2,000 workers and farmers held wage protests for twelve days outside of Shanghai” in December 2008, “striking workers and security guards clash in a textile factory in Dongguan” on January 15th, and on January 16th, “100 police officers stage a rally in Shenzhen after being sacked from their jobs.” The Times Online also reports that in the southern province of Guangdong, “three jobless men detonated a bomb in a business travellers’ hotel in the commercial city of Foshan to extort money from the management.” In the 12 days of mass demonstrations last December, the Times reports:

…angry workers besieged labour offices and government buildings after dozens of factories closed their doors without paying wages and their owners went back to Hong Kong, Taiwan or South Korea. In southern China, hundreds of workers blocked a highway to protest against pay cuts imposed by managers. At several factories, there were scenes of chaos as police were called to stop creditors breaking in to seize equipment in lieu of debts.



Jim Sinclair’s Commentary

Today in the stinking criminal under-world of hedge fund lowlifes:

Judge asks whether guards can use deadly force should Marc Dreier …
New York Daily News – New York,NY,USA
Dreier, 58, is accused of duping hedge fund investors out of nearly $400 million through a scheme to sell fake promissory notes. Shargel estimates that the …

Shredded letter haunts accused hedge fund swindler in court
New York Daily News – New York,NY,USA
BY THOMAS ZAMBITO Prosecutors cited more than just a shred of evidence Tuesday against a hedge fund manager accused of ripping off clients – they …

LuxAlpha Liquidation Sought by Regulator Over Madoff
Bloomberg – USA
3 (Bloomberg) — Luxembourg’s financial regulator will ask a court to liquidate Access International Advisors LLC’s LuxAlpha Sicav-American Selection fund …

Mass. fund fires firm that put money with Madoff
Reuters – USA
By Svea Herbst-Bayliss BOSTON, Feb 3 (Reuters) – Massachusetts’ state pensionfund fired a hedge fund firm on Tuesday that lost millions by putting money …

The Criminal Report Daily : Investigation Discovery: Missing …
By David Lohr 
Arthur G. Nadel, the missing 76-year-old hedge fund manager from Sarasota, Fla., was arrested last week after turning himself in to federal authorities. According to the US Attorney’s Office, Nadel, accompanied by two …

Jailed Hedge Fund Manager to Face Charges in New York — Attorney …
By timgrenda 
Nadel, 76, managed six New York-based hedge funds, but disappeared in January 2009 after investors learned their accounts had been drained. He remained missing for several weeks until federal investigators tracked him down in Tampa, Fla. and placed him under arrest. … The investigation into Nadel’s handling of customer investments began in the wake of the arrest of another New York money manager accused of defrauding investors. That man, Bernard Madoff, …

Hedge Fund Zone » Luxembourg to shut down Madoff-linked hedge fund
By Yahoo! News – Search Results for "hedge fund" 
Find the best information on hedge funds! … Hedge Fund Zone. "It’s Time to Discover the BEST Information About Hedge Funds!" February 3, 2009. Luxembourg to shut down Madoff-linked hedge fund. Luxembourg financial supervisors said …

Reporter Arrested At Madoff’s Front Door | FINalternatives
By Jon Shazar 
There were more losers than winners in the hedge fund universe last year as fundsgrappled with a deteriorating credit market and a global equity sell-off. One firm that bucked the trend with its strong performance was …

Arrest in suspicious powder mailings to be aired – Texas News …
By Examiner Texas Headlines 
Arrest in suspicious powder mailings to be aired – Texas News, 2009-02-03 14:57:33 on, all news no fluff.

Jim Sinclair’s Commentary

Between an ally denying the US a key airbase and this push out of Pakistan, President Obama is being challenged in a pincer move in Afghanistan.

Taliban Destroys a Key Bridge in Pakistan

Main Supply Route For U.S. Is Cut Off
By Candace Rondeaux
Washington Post Foreign Service
Wednesday, February 4, 2009; Page A12

ISLAMABAD, Hundreds of trucks bearing NATO supplies idled at terminals near the city of Peshawar in northwestern Pakistan on Tuesday after Taliban fighters blew up an iron bridge about 15 miles away. The explosion, the latest in a spate of attacks, cut off the main supply route for U.S.-led forces in Afghanistan, complicating plans to substantially increase the Western military presence there and roll back recent gains by Taliban forces.

For a quick look at the state of the war on terrorism in Pakistan and Afghanistan, one need travel only as far as Peshawar’s Karkhano Market. Set at the edge of the sprawling city of 3 million in a dusty warren of ramshackle kiosks, the 24-year-old market has long been known as a key smuggling hub for the hundreds of traders who regularly cross the mountainous no man’s land that lies between Pakistan and Afghanistan.

Business has been especially brisk in recent months, in the wake of more than a dozen major Taliban attacks on NATO supply routes and the creeping encroachment of insurgents in northwest Pakistan, according to Karkhano shopkeepers. Goods pilfered from raids on NATO supply trucks have become a mainstay for shopkeepers like Noor Mohammed.

Customers at Mohammed’s small kiosk can easily purchase a set of American-made tools or an American flag or a durable American-made pistol holder. A U.S. military-issue ammunition vest and staff sergeant’s sun cap together cost a mere $20. "It’s not a problem to get anything here as long as you have the money," Mohammed said. And, with AK-47 assault rifles selling for about $1,000 apiece, profits have never been better.


Militants killed, NATO trucks targeted in NW Pakistan

From Zein Basravi

ISLAMABAD, Pakistan (CNN) — Conflict raged Wednesday in volatile northwestern Pakistan, with nine militants killed in a gun battle, the Taliban’s abduction and release of about 30 police officers, and strikes on stranded NATO trucks.

It’s the latest fighting between Pakistani security forces and the Taliban militants in the northwestern region near Afghanistan.

The country’s central government has little control in the area, and U.S. intelligence officials say the area is a haven for militants.

Nine militants were killed when police and local residents foiled an attempted kidnapping of the mayor in a village on the outskirts of Peshawar, police told CNN. Taliban fighters attempted to abduct Fahim Ur Rehman, but police and residents resisted and a gun battle ensued.


‘Taliban seize’ Pakistan policemen

Thirty Pakistani policemen are reported to have been captured by Taliban fighters in the northwest Swat Valley after they laid siege to a police station.

"Taliban kidnapped 30 policemen and blew up the police office after a day-long fight," Dilawar Khan, a regional police commander, said on Wednesday.

Army troops were sent to the Shamozai area in an effort to rescue the police officers but the operation was suspended after dusk fell, security officials said.

Four paramilitary and police officers were wounded in the clashes around the police station, a Pakistani intelligence official said.


Posted at 10:34 PM (CST) by & filed under Guild Investment.

Dear CIGAs,


We did not like the tone of Treasury Secretary Geithner who recently quoted President Obama’s statements against China in his answers to congress’ questions…neither did the U.S. Treasury bond market.

The Obama administration’s anti-Chinese rhetoric was answered by China and Russia at the World Economic Forum last week in Switzerland.  At that event, both Chinese Premier Wen and Russian President Putin railed against the U.S. mismanagement of its financial affairs, which has led to the global banking crisis and economic suffering around the globe.

This rhetoric on both sides sounds disturbingly like the precursor to a trade war.  Investors should keep in mind that there are political elements in every country which are economically short sighted, and want protectionism to further the financial goals of their membership.  There will be intense lobbying for such an outcome for groups all over the world.  The question is whether politicians answer the siren call of protectionism.

We expect to see more social disruptions, mainly in Europe, and less in Asia, as more people lobby for protectionism.  Already, France and Britain are having anti-foreign worker rallies…we all know blaming foreigners is a very old and disreputable political trick.

If trade wars break out, then there will be a long depression probably followed and exacerbated by a runaway inflation.  The inflation has the potential to bankrupt many and cause widespread suffering among the middle class.  A good example of this was the inflation experienced during Weimar Germany after World War I.

Throughout history, there have been several cases where the desperation of the middle class creates social upheaval, and gives rise to "a man on horseback", one who can lead the people out of misery and to increased power and prosperity.  In the 20th century alone, several such men (Mussolini, Hitler, Franco, Lenin and others) came to power during times of social upheaval and economic dislocation.  These men often rose to prominence by mythologizing the past of their nation, and making it appear that the nation had to reclaim their rightful place as a leader in the world order.  Looking to regain national dignity and respect, the people rallied behind the "man on horseback" whoever he was, and granted him authority to create change.  In general, nationalist, protectionist policies tend to erode the standard of living, and can wreak havoc on economies…in any country.


Most respected economists expected a 5-6% decrease in GDP in the 4th quarter of 2008.  The data came in at 3.8% because it was boosted by a rise in inventories of goods that were produced but not sold in the quarter.  Clearly, a build up of inventories that are not sold is a bad economic data point.  This time, the government used it to boost a flagging GDP report.  If one excludes this adjustment, GDP fell by 5.1% after inflation in the quarter.

The GDP growth rate has fallen from its peak by more than 8 percentage points.  It is just a matter of time until economists, many of whom use the rule of a peak to trough decrease of 10% in GDP to define a depression, will be admitting what we have been saying for quite a while…this is a depression.



It is not fun to say, and not fun to hear, but we believe that the truth trumps "break it to them gently" political verbiage.


During the major decline in the U.S. market in the 1930’s, and in the Japanese market in the 1990’s, many rallies occurred.  It is common for declining markets to put on frequent 25% rallies and the occasional 40% rally.  I believe Japan had 13 rallies of 25% and 5 rallies of 40% during their 13 year decline. 

We suggest investors try to use these rallies to their advantage…but remember be alert and very quick to take profits. The rally that began in the U.S. after bottoming in November was one of these.  Now, the market is again getting oversold and we would not be surprised to see another U.S. and Asian stock market rally begin soon.

In our opinion, these are only rallies and not new bull markets.  Take some trading profits but remember that the big market bottom has not occurred yet.


We continue to hold gold shares as the safe haven investment while more and more countries report financial problems.  As a currency comes under attack (think Iceland, Britain, and others), people flock to gold, the ultimate currency.  They sell the local currency and seek the safety of gold.  Thus far this year, gold shares have greatly outperformed the market (as measured by the S&P 500) which was down 8.4% in January.  We see forthcoming opportunities to trade U.S. and foreign growth stocks as the occasional 25% market rally develops.  We do not see a long term market bottom for a few more quarters, and thus we see no long term investment opportunities apart from gold.  We do, however, see profit opportunities in gold and in trading opportunities on both the long and short sides.

Our largest investment position continues to be cash held in Tbills and other conservative interest bearing instruments.



In several of our letters last year, we discussed the issue of account custodianship, encouraging investors to understand the account agreements and investor protection provisions with their financial institutions.

Most U.S. bank account holders are very aware of FDIC and the up to $250,000 insurance it provides on bank deposits.  Correspondingly, U.S. brokerage account holders have Securities Investor Protection Corporation (SIPC) insurance insuring their deposits.  SIPC’s limits only protect account holders up to $500,000 (up to $100,000 cash and up to $400,000 in securities).  For larger U.S. brokerage account holders, the firms usually provide some sort of excess SIPC insurance.  Many U.S. brokers and investment banks used Customer Asset Protection Company (CAPCO), a company set up by a consortium of brokers to provide insurance on customer deposits above the SIPC’s $500,000 limits.

We have always doubted that a group of brokers could insure each other if the entire system were stressed.  It comes as no surprise to us that after the Lehman Brothers bankruptcy, CAPCO has announced that they will not renew their brokerage firm surety bonds when they expire on February 16, 2009.  So, as of that date, CAPCO’s member brokerage firms will have to get excess SIPC insurance from some other carrier.

At Guild Investment Management, we spent many hours with our attorneys, reviewing several firms’ brokerage and bank account agreements.  The bottom line is that while governmental insurance is better than it was, it is not sufficient for larger depositors.  Our preference is to choose a custodian where depositors’ assets are held in trust/custodial accounts, and not on leveraged balance sheets of financial institutions, nor lent or pledged to others.

If you are an investor with accounts that exceed government sponsored insurance limits, please do not hesitate to contact our offices.  The financial landscape has changed considerably in the past year.  Governments and central banks around the world have spent a lot of money backstopping failing institutions, and increasing government insurance limits.  This has improved depositor protections; however the issue still requires your attention…especially if you have large balances on deposit.

Thanks for listening.

Monty Guild and Tony Danaher

Posted at 5:34 PM (CST) by & filed under General Editorial.

“Hyperinflation is the product of a slow, but continuous loss of a currency unit’s buying power, degraded political expediency motivating economic decision making and total degradation of the business community in the condition of a locked credit base.”
–Jim Sinclair

Ralph T. Foster says:

“While currency collapse is generally sudden and dramatic, it is not the only problem that plagues the world’s floating currencies.

Far more insipid is a currency’s gradual decline in value over time.

This phenomenon has affected nearly every country on Earth; and for the first time in history, it is so commonplace as to be perceived as normal, or even expected. Physical money is no longer something to hold as a long-term security as conceived by Aristotle, but rather a day-to-day medium of exchange. Anyone saving paper currency for the future is bound to gradually lose most of its purchasing power.”

This book, “Fiat Paper Money, The History and Evolution of Our Currency" by Ralph T. Foster is a text that should be studied by all those that claim to be students of markets, history and currency.

Mr. Foster proves historically that a currency that continually loses buying power over a contiguous period of years and enters into a period of significant economic dislocation will implode all of a sudden as in a currency event of hyper-inflation.

This sounds to me like the dollar is coming up for just such an event as this entire crisis is an OTC derivative exported USA product. You might consider obtaining this fine work of Mr. Foster.

Posted at 4:53 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

Being a farmer, I watch weather and commodity markets quite closely. It is my opinion that a major drought in the heartland of the US in either of the next 2 growing seasons (2009 or 2010) will bring massive food inflation. There is currently a drought in Argentina/Southern Brazil worse than they have seen in over 30 years. Click here to view a video on the drought…

There is a drought in northern China as I write this Click here to view an article on the drought…

We haven’t had a major crippling drought in the U.S. since 1988. The 19 year Benner cycle says we are overdue. If it occurs in 2009 or 2010 we will see massive food inflation worldwide in my opinion.

As always your efforts and counsel are hugely appreciated.

CIGA Eddie H.

Dear Eddie,

You should focus on the even longer weather cycles which underscore the conglomeration of cyclical indicators of types and kinds coming in a peak and trough just before or on January 14th, 2011.


Posted at 3:48 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Yesterday the Euro was in – today the Euro is out. Yesterday the Swiss Franc was in – today the Swiss Franc is out. Yesterday the Dollar was out – today the Dollar is in.

Translation – more hedge fund madness.

I am going to make a suggestion to the regulators since we have now apparently reached the point where the Federal Government gets to now dictate executive compensation and such (then again the fools that dreamed up these financial weapons of mass destruction only have themselves to blame for bringing down the heavy-hand of the government busybodies upon them). One way to restore some sort of stability to the financial markets would be to issue an executive order banning all hedge funds from investing anywhere with real money. To compensate them for their loss of entertainment, the government should buy all of their managers and their employees an X-Box complete with the newest, fastest moving and most addicting video games and have them all distributed before the month of February is out.

Such an act would to two things – it would rid those of us who love the markets and remember when they were once sane, of the hedge fund created idiocy that we are forced to daily observe. Secondly it would demonstrate a compassionate care for the feelings of the hedgies by helping to ameliorate their withdrawal from the trading business. After all, those guys are used to pushing lots of buttons without knowing why or what they are doing and to cut them off cold turkey might be harmful to their overall psychological well being. I would hate to think that we might see some of them standing on street corners furiously pushing the crossing buttons on the red lights. Such a sight would no doubt even move the most dispassionate among us.

By the way, those of you looking for a good deal on a corporate jet or helicopter should contact Bank of America – news has come out that they are selling Merill’s copter plus some of their own fleet. I think they should put them up on Ebay. We could all chip in and buy them and then structure a debt package backed by these jets and this helicopter and sell it back to Bank of America as a high-yielding security after we get Moody’s and Fitch to stamp it “AA”. Let’s stick a yield on it of 5% and let AMBAC insure it for us. Then we could take our profits and buy lots more helicopters and corporate jets from distressed financial companies and do this some more. If the financial companies held enough of our helicopter/jet securities on their books, they could then feel confident and would begin lending again. We would all then get the credit for saving the economy and all of the politicians in Washington could just go home before they further destroy the nation. Having become extremely popular, we could then run for public office, get elected all over the nation and then go to Washington where the first thing we could then do would be to reintroduce gold back into the monetary system. And to think some of those who read this site happen to believe that we who love honest money do not have a plan!

Gold was out yesterday – today it was back in. Tomorrow – who knows? See the chart for the technical picture as I have made a few notes that are fairly self-explanatory.

Euro gold was back over the €700 level at the PM Fix today.

A side note – deliveries in February have so far been disappointing when compared to December 2008. Only a bit more than 200,000 ounces of gold have been stopped compared to 1.17 million after the first 4 delivery days back with the December contract. That is not going to help dislodge the strangle hold that the bullion banks have on the Comex.

The mining shares are higher but so are the broader stock equities and gold bullion so it is tricky trying to read what they are keying off of in today’s session. Again, both the HUI and the XAU are showing consolidation patterns on the charts.

I should note as I did yesterday, both crude oil and particularly natural gas, are looking more and more like they are in the bottoming process. While one can never be too sure with the kind of volatility we are seeing currently in so many markets, both of these energies have stopped moving lower and look to be probing for a solid bottom. Again, if these are indeed bottoming, it will be beneficial to gold since it will help put a floor under the entire commodity sector, particularly as measured by the various commodity indices. In looking at the crude oil chart, it is still trading within a broad range between $35 – $50. It will take a breach of $50 on good volume on a closing basis to convince a lot of skeptics that crude has finally bottomed for good.

Bonds continue heading lower but have managed a decent intraday bounce in the session. They are overdue for a bounce higher but need some sort of spark to set it up. Today’s low is not far above the 100 day moving average so clearly if they are going to bounce, they had better do it soon or else we are going to see the distinct possibility of another sharp downleg.

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


Posted at 1:36 AM (CST) by & filed under General Editorial.

Dear Friends,

How many times have I warned you that FRAUD is rampant in gold storage, gold deals and internet financial anything.

I predict billions will be lost by gold investors who sent money to people just because they like what they write, like the pay in the USA and get gold somewhere else deals or are simply to lazy to do what is so easy and requires no agent.

I have told you not to leave a penny with any coin dealer, to distance yourself from all financial agents and not to deal with internet financial anything.

Did you listen? Many have not!

If you did not and have gold in anything like this get your gold or your money tomorrow.


Buy your gold on the Comex at the world gold price and take delivery out of their warehouse.

Your only insurance is gold in your hand. Do what I have done.

Respectfully yours,

Published: October 5, 1983

Some $60 million worth of gold, silver and platinum sold to thousands of individuals and then supposedly stored in Rocky Mountain vaults may never have existed, an investigation suggested yesterday.

The possibility emerged in an audit conducted by the accounting firm of Touche Ross & Company in connection with the suicide last Wednesday of Alan David Saxon, 39-year-old chairman of Bullion Reserve of North America, a gold dealer with offices in Los Angeles, Dallas and Hong Kong.

Bullion Reserve has 30,000 to 35,000 customers. If the missing assets cannot be found, most of their investments may be lost.

Vaults Near Salt Lake City

Lawyers for the company said the audit showed that a depository, owned by Perpetual Storage Inc. of Salt Lake City and buried 200 feet in a nearby mountain range, contained only about $900,000 in bullion and coins. Another $140,000 to $150,000 worth of coins were found at Brinks Inc. of Los Angeles, another Bullion Reserve storage center.

The discovery, made over the weekend, prompted Bullion Reserve to file a bankruptcy petition Monday in Los Angeles, seeking court protection from its creditors.



Jim Sinclair’s Commentary

Do this and gold goes to Alf’s numbers.

I rate the probability of the following occurring at 10 out of 10. It is called global hyperinflation.

This form of hyperinflation, a currency event, will occur by mutual panic if not as a plan of last resort.

This mutual panic and/or plan of last resort has a time window of on or before January 14th, 2011.

U.S. dollar devaluation on its way
Posted: February 02, 2009, 4:01 PM by Diane Francis

In 1992, I was given what became my favorite hotel bill keepsake when I stayed in Mexico City and was charged one million for a brief business stay.

It wasn’t a mistake. That was one million pesos and the Mexican peso was becoming worthless. By 1993, then-President Carlos Salinas de Gortari stripped three zeros from the currency and renamed it the Nuevo (or New) Peso.

The transition from worthless to one Nuevo Peso to one U.S. dollar was done in three years from January 1, 1993 to January 1, 1996. The word "nuevo" was removed from the currency and it returned to be called "peso".
Now it is 2009 and what appears to be looming, according to one authoritative press report this weekend, is a massive pre-emptive devaluation of the U.S. dollar as Team Obama readies itself to announce the “Big Bang” – a gigantic bailout of the frozen U.S. economy involving trillions of dollars.

So far, Washington has allocated US$750 billion for banking rescues and another US$825 billion for job creation projects. But that’s nothing.