Posted at 1:11 PM (CST) by & filed under General Editorial.

Dear Friends,

This is the exact point in the market at which the Bush Administration initiated the same actions as Roosevelt, but at a magnitude ten and all at once.

What do you think the Obama Administration will do?

We know the Fed has moved to Quantitative Easing.

Quantitative Easing
guardian.co.uk, Tuesday October 14 2008 12.10 BST

Quantitative easing is what non-economists call ‘turning on the printing press’.

In extreme circumstances, governments flood the financial system with money, easing pressure on banks by giving them extra capital.

Ben Bernanke, the chairman of the Fed, won the nickname ‘helicopter Ben’ when he floated just such an idea earlier this decade. US economist Milton Friedman had originally said it would be theoretically possible for governments to drop large amounts of cash out of helicopters for the public to pick up and spend."

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Lie-bor lies. If that were not so you would see the trickle down into general corporate paper which is nonexistent.

The dollar rally is from technical currency flows that will end and therein end the dollar rally.

Obama wishes to reduce military spending and increase fiscal stimulus. The latter will prove much easier than the former. Getting out of conflict is much harder than getting into one. Other problems of a military nature sit on the horizon. It is reasonable to assume FISCAL STIMULATION is the Obama plan regardless of other desired routes.

Gold’s decline is not part of the plan.

A strong US dollar is not part of the plan.

Significantly reducing military spending is more rhetoric than part of the plan in a practical sense.

When the boxes take shape we will add Obama to the schematic.

BushRoosevelt

Posted at 11:52 PM (CST) by & filed under General Editorial.

Dear Friends,

There are only two things you need to know:

1. Hyperinflation takes birth and is currency-visible during major economic upheavals. There is NO historical truth that business recovery is a necessary criterion to transmute massive increases in money supply into hyperinflation.

2. What has been the major cause of the transmutation of massive liquidity into hyperinflation has been one form or another of Quantitative Easing combined with a loss of confidence in the inflator.

Quantitative Easing does not sterilize it’s offspring – violent inflation. We will see this offspring not in the far future but in 2009, 2010, 2011 and maybe much further.

It is akin to the Japanese Sci-Fi out of the 70s titled “ The Green Blob That Ate The Earth.” It just grew and grew until it consumed everything.

For the moron financial TV hosts claiming that major inflation is well down the road because inflation requires a business recovery to occur, tell them to review:

Angola 1991-1999
Argentina 1981 – 1992
Belarus 1993 – 2008
Bolivia 1984 – 1986
Bosnia – Herzegovina 1992 – 1993
Brazil 1986 -1994
Chile 1971 – 1981
China 1948 – 1955
Georgia 1993 -1995
Germany 1919 -1923
Greece 1943 – 1953 At the high point prices doubled every 28 hours. Greek inflation reached a rate of 8.5 billion percent per month.
Hungry 1944 – 1946
Israel 1971 – 1985 (price controls instituted)
Japan 1934 – 1951
Nicaragua 1987 – 1990
Peru 1987 – 1991
Poland 1990 – 1994
Romania 1998 – 2006
Turkey 1990 – 2001
Ukraine 1992 – 1995
USA 1773 – not worth a Continental
Yugoslavia 1989 – 1994
Zaire 1989 – present (now the Congo)
Zimbabwe – 2000 to present. November of 2008 – inflation rate of 516 quintillion percent

From http://en.wikipedia.org/wiki/Weimar Republic

Posted at 11:50 PM (CST) by & filed under General Editorial.

Dear CIGAs,

First they geek net out about 40% of OTC derivatives, not knowing the credit conditions of the counterparties to these net outs. Apparently winning and losing does not count. Performance ability of a special performance contract counts less.

After that they declare there is no problem with OTC derivatives due to some magic wand of computer technology that forgets about insolvency, taking notional value to real value and expressing the risks inherent in all OTC derivatives as miniscule compared to notional. If these risks are so small what is all the hubbub about?

Truth in statistics simply does not exist in an amoral world where deceit is a virtue and the most successful predator is the person to be admired. It is a world of takers and destroyers, not givers and builders.

The ability to get an honest number on OTC derivatives no longer exists.

Treat the symptoms and hide the problem is the formula for destruction, not correction.

Posted at 9:57 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

Regarding gold, it just never ends. The gold banks take away our gains as if it was their sole reason for existence.

CIGA Tony

Dear Tony,

When did a bully stop bullying unless the victim finally beat the crap out of the bully? Nothing stops unless the victim takes action to stop it.

There is only one action that will bring this daily raping of the Gold Market to an end.

If you are tired of being had by paper gold the following is the only course of action if you wish to take a positive step to end the games being played at your expense.

Do the necessary to stop the daily rape.

Delivery Process for Gold or Silver:

Delivery – Prudential holds the receipt in PFG’s account for customer

1. Client buys the futures contract.
2. Client will take delivery between First Notice Day and the Last Trading Day.
3. On delivery day account is debited cost plus a $50.00 delivery fee.
4. Receipt is booked to customers account
5. Monthly storage charge passed on to customer’s account(about $50.00).

Physical Delivery – Customer wants bars in their procession

1. Client buys the futures contract.
2. Client will take delivery between First Notice Day and the Last Trading Day.
3. On delivery day account is debited cost plus a $50.00 delivery fee.
4. We will provide the customer with name and phone number of the individual at the depository to contact.
5. Customer makes arrangements for the physical delivery

CIGA JB Slear, who is in the commodity business, offers his services to assist anyone seeking physical delivery of metals. He will guide you through the entire process, including arrangements for delivery.

To be totally clear, I expect JB not to discuss any type of speculation with you but ONLY help you acquire 100 ounce gold bars.

Once 21,000 bars have been taken the paper gold’s reign over the price of gold is over.

Gold can easily be shipped anywhere on the globe you want it as long as there is a bank to accept it on your behalf, even if they then hand it to you. All major armoured car services also have protected shipment methods.

For those wishing to learn more about international shipment for deliveries taken out of the COMEX warehouse, you will find it here soon.

JB will help you in the process of taking that actual delivery.

If you do nothing you by omission permit the daily market rape.

CIGA JB Slear can be reached at the following:
Fort Wealth Trading Co. LLC
www.FortWealth.com
866-443-0868 ext 104

Posted at 12:14 AM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

Today the Treasury released its International Capital Flows data for the month of September 2008. There are several noteworthy points that I feel deserve some comments.

First of all, the headline number was met with great accolades from various pundits as it showed that net flows were the largest since January 2006. On the surface that was indeed remarkable. However, it should be noted that since late last year but especially since the middle of 2008, a trend has developed which can in part explain why we are witnessing continued capital inflows into the US even with all the uncertainties surrounding the massive bailouts that we knew were coming earlier this year and have only increased as we near the beginning of 2009.

If you look at the first chart I have posted, you will see it is labeled, “Net Purchases or Sales by US Residents of Long Term Foreign Securities”. Extracting this portion of the data from the Treasury’s report we can see whether or not US investors were net buyers or net sellers of foreign securities. If they were net buyers, the numbers on the chart will be negative meaning money was FLOWING OUT OF THE US in order that US based investors could buy securities in emerging markets or other foreign markets. If the numbers on the chart are positive, it means that money was FLOWING INTO THE US as these same US based investors were SELLING their holdings abroad and REPATRIATING the money back into the US.

For the sake of the Treasury’s reports, money that is being repatriated from abroad by US based investors is counted as a positive to the NET FLOWS data. What some folks are unwittingly doing is taking the headline number which shows a huge inflow and are making assumptions that fail to take into account that in some instances, more than half of the net flows coming into the country are NOT NEW PURCHASES of US securities by foreign investors and Central Banks but are merely the result of US investment funds and hedge funds selling their overseas holdings and bringing the cash back home. Whether they are doing this to meet margin calls, get liquid, pay out client redemption requests, or out of fear dumping everything and anything they own is irrelevant. The fact is that they are bringing the money back home and that is, in my opinion, clouding the true picture that the TIC report is showing.

Just look at the chart and you will see that since the inception of the data plot, the recent repatriation dwarfs anything that we have seen since 2000. If you want to know where the strength in the Dollar is coming from, look no further than this chart because all of that repatriation means that foreign currencies were exchanged for US Dollars. When this repatriation comes to an abrupt end and the hedge fund deleveraging is complete, all of the buying that has pushed the Dollar higher into a near vertical rally will abruptly cease and when it does, down will come baby, cradle and all.

A second noteworthy point – this data, which is two months old, shows an historical occurrence, namely, that China has now surpassed Japan as the number one holder of US Treasury debt. I have been pointing out for several months now that based on the rate of Chinese buying of US Treasuries, and the slow and steady rate at which Japan was becoming a net seller, the Chinese would soon become number one. They have now arrived.

Also, since it is highly likely that the vast majority of buying that is coming out of London and is grouped into the category of Great Britain’s holdings is for Chinese customers, their share of US Treasury holdings is likely much larger than the reported $585 billion.

Is it any wonder that China now has such a great stake in what happens to the US Dollar, the bailouts and the general health of the US fiscal condition? If I were them, I think I would sleep much better if I began accumulating gold as a decent sized portion of my reserves!

 

Click here for today’s TIC charts with commentary from Trader Dan Norcini

Posted at 12:04 AM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

I call your attention to the following story from the Dow Jones wire service…

The amount of gold being discussed would make China the second largest holder of gold among the nations of the world, surpassed only by the US with its reported 8,133.5 tons. The more we see stories of this nature coming out of the various Chinese newspapers, the more credible this story becomes. I think it is a done deal and that the Chinese are going to be large buyers from this point forward. That should help to provide very strong buying support beneath the gold market.

I like to fantasize just a bit that they will come to the Comex and clean it all out in one night!

China PBOC Mulls Raising Gold Reserve By 4,000 Tons – Report
Tue Nov 18 20:51:38 2008 EST

BEIJING (Dow Jones)–China’s central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country’s huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

The Guangzhou-based newspaper didn’t elaborate on the plan.

China’s forex reserves, at US$1.9056 trillion at the end of September, is the world’s largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.

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