Posted at 3:18 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

If BJP takes over, I shall see you in Kwa Zulu Natal/Zanzibar. I for one do not fancy a radiation cloud drifting my way, or the detonation of suitcase nukes in London, Paris or New York, that probably have already been distributed from Pakistani Intel (ISI) to Taliban operatives. Let the rise of the BJP in India be our cue to abandon ship. It’s coming. It’s very close. Few seem to recognize it.

CIGA Pedro

World stability hangs by a thread as economies continue to unravel
The political bubble is bursting. Spreads on geo-strategic risk are now widening as dramatically as the spreads on financial risk at the onset of the credit crunch.
By Ambrose Evans-Pritchard
Last Updated: 7:15PM GMT 01 Dec 2008
(Excerpts from article)

"If the atrocity now propels the Hindu nationalist leader Narendra Modi into office at the head of a revived Bharatiya Janata Party (BJP), south Asia will once again face a nuclear showdown between India and Pakistan.

Events are moving briskly in China too. Wudu was torched by rioters this month in a pitched battle with police. Violence has spread to the export hub of Guangdong as workers protest at the mass closure of toy, textile, and furniture factories."

"The global financial crisis has not bottomed yet. The impact is spreading globally and deepening," said Zhang Pin, head of the national development commission. "Excessive bankruptcies and business closures will cause massive unemployment and stir social unrest".

More…

 

Dear Pedro,

One way or another Pakistan will light the fuse that ignites the world.

Regards,
Jim

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

Dear Friends,

The following are all international shippers of precious metals. I hope to have answers for you soon on costs and procedures for shipping Comex bars to Zurich Airport Free Zone depository.

Do you ever get the feeling that the Comex today is giving you the High One and the Bronx cheer?

Nobody accepts that we can act as one.

* The Brink’s Company
* Loomis, Fargo & Co.
* Dunbar Armored, Inc.
* Blackwater Worldwide
* Garda Cash Logistics
* Brink’s, Incorporated
* United Armored Services
* Prosegur Compañía de Seguridad, S.A.
* Rochester Armored Car Company, Inc.

Regards,
Jim

Jim Sinclair’s Commentary

Good timing?

Brazil selling 100 missiles to Pakistan

BRASILIA, Brazil (AP) — Brazil’s defense minister says his nation is selling 100 aircraft-borne missiles to Pakistan.

Brazilian officials approved the euro85 million ($107 million) sale of the missiles, which can be installed on jets and used to take out radar installations.

Brazilian news media say Brazil’s air force negotiated the sale with Pakistan’s government. The deal needed the approval of Brazil’s trade ministry, which signed off on the deal on Tuesday.

The Brazilian arms maker Mectron will make the missiles.

Brazil has been trying to bolster its defense industry, which was the largest in the developing world 20 years ago. The industry has struggled since the end of the Cold War.

More…

Posted at 3:11 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

I am a bit pressed for time today as the price action in the various commodity futures that I trade is keeping me on my toes. Some of the commodity markets are following the US equity markets higher today while some of them are not, notably gold and most of the metals. Gold in particularly is not trading “right” today. By that I mean the correlation between it and the US equity markets has been pretty close recently. When the equities are moving higher, gold has been moving higher in what I am calling the reflation trade. The opposite also has been holding true. Today, the equity markets were initially higher and yet gold still got  whacked again.

Generally, we have been seeing the Dollar and the US equity markets going in opposite directions as well. Today that changed with the Dollar moving slightly higher while the equities were also moving higher. That brought in selling into gold after the market had recovered most of its overnight losses. About 30 minutes before the close of pit session trading in New York, gold was hit once again. So too were the mining shares. The war against gold obviously continues. Interestingly enough, the equities faded off their highs just about the time gold was getting ready to close in the pit.

The volume in the gold is getting quite anemic. It looks more like a holiday trade than a normal business day trade. Spreads between bids and offers at times are as much as 7-8  points at times even in the most active month. The contraction in open interest is taking its toll on liquidity. Yesterday saw another drop of over 1900 contracts bringing the total to an almost laughable 264,796. I say laughable because who would have envisioned that during a time of such incredible financial duress, the interest in gold would be collapsing. That just goes to show the extent of the de-leveraging trade. Again, we are talking about the phony paper gold market and not the real deal.

Technically gold is treading water holding just above support near the $760 level basis February. Failure there and it will retest $740. Upside resistance is first at $780 – $785 and then at $800.

We had another 285 deliveries assigned this morning with HSBC the largest stopper followed by Bank of Nova Scotia. Fortis Clearing is providing the brunt of the selling. Total deliveries so far this month are 11,758 contracts or 1,175,800 ounces. That is a nice chunk of gold but we still need some more taken out.

Open interest in the December contract still is a bit high for this late in the contract’s life which could mean that there are more than a few players left who intend to take delivery. The total remaining as of yesterday is 2,118. That is 211,800 ounces of potential physical gold purchases. More guys still could come into that month yet if they knock prices much lower so stay tuned.

A quick comment about the price action in so many of these markets which can aptly be termed, “schizophrenic” – they have become the domain of day traders and scalpers. Drawing too much in the way of assumptions from price action in regards to the fundamentals is a waste of time. They will go in whatever direction the most money happens to get thrown at them on any given day. If the biggest order of the day is one that says in effect; “Jump off the edge of the canyon and follow me” – guess what – They all will do exactly that!

Newsletter writers in particular, who are forced to make daily recommendations to their readers are to be pitied. What they write one day, they have to take back the next only to eat those words the day after. Better to sit on the sidelines and wait and see if some semblance of sanity comes back after the new year. I have chatted with a few of my trading pals and the consensus is becoming just that. Take a long vacation and let the rest of these guys chop each other to pieces, particularly the hedgies.

Click chart to view today’s action in Gold as of 12:30pm CDT with commentary from Trader Dan Norcini

December0308Gold1230pmCDT

Posted at 11:59 AM (CST) by & filed under General Editorial.

Dear Friends,

Gold last evening was trading at $780. On the Comex it was trading at $765. That has to motivate you to fight back.

Gold moved back, influenced by the firming euro.

Gold is a currency and the Comex cannot change that, however you have the power to change the COMEX.

Respectfully yours,
Jim

Posted at 11:30 AM (CST) by & filed under Jim's Mailbox.

Subject: RE: If the COMEX is to be busted, it is the bankers themselves who will do it.??????

Hi Bill,

I do not know who started this idea of “busting” the Comex but like I mentioned in my commentary today – our campaign is to have gold buyers systematically buy the gold that they had already planned on buying every time the bullion banks smash the paper price down with their sell orders. By so doing this, the paper shorts are being served notice that the very strategy they use in the gold market, namely selling strength and buying weakness, is now being turned against them. Only this time around, the onus is on them because they will be forced to actually acquire enough physical gold to deliver the metal to buyers who buy into the weakness with the express intent of taking physical delivery of the gold. Come delivery month, the paper shorts get assigned and must either have the metal to sell or have to get out. The longs who intend to take delivery can just sit tight which means that the paper shorts now have NO ONE TO BUY FROM and thus are forced to bid the market higher in order to exit.

Either way, the longs win. Remember the silver market of the Hunt Brothers’ day and how they trapped the paper shorts.

Trader Dan

Dear Dan,

I totally agree. The intention is NOT to bust anything.

The word bust is WRONG. Bust is the mindset of the predators who have attacked gold shares.

If BUST is the mindset of this initiative we are acting just like the Demonic Hedge Fund managers and their law-breaking broker intermediaries.

What we want is a level playing field.

A level playing field simply requires 21,000 contracts taken into delivery, and REMOVED FROM THE COMEX.

The Comex will never default or be broken. It is simply impossible in a practical sense. The Comex in the final analysis will transmute to a cash gold exchange. This will stop the activity that was clear in the Comex pre-US session and this morning

All the best,
Jim

Trader Dan,

I think your quote last night came from a famous trader of the 20s named "Sell em Ben Smith," a friend of my Dad’s. He and Bert cleaned up on the 29 break and after the 30s rally. Next time I get the honor of talking with you, I have a story about "Sell em Ben Smith."

Regards,
Jim

 

Jim,

The easy assumption for many is to assume that inflation is dead. The price at the pump has collapsed and price of oil creates inflation, right? Rising oil prices do not cause inflation. Inflation is caused by too much money chasing too few goods and services. As global monetary policy prints money to provide needed “liquidity,” it is absolutely essential to remember that monetary inflation always precedes price inflation.

While the alphabet soup of monetary aggregates, M1, M2, and M3 has receded from the recent highs, they continue to grow at alarming year-over-year rates. According to shadowstats.com M2 the arithmetic year over year growth rates for M1, M2, and M3 are roughly 8%, 8%, and 11% respectively.

 

Click here to view the charts…

 

History suggests that mature, stable economies require only a 2-3% per annum growth in money.

Excessive money growth, however, does not necessarily mean an increase in widely followed inflation measures or tangible goods. As long as excessive money growth can be redirected from traditional inflation measures, it can be largely hidden from the public.

One of the main conduits that redirected monetary inflation has been derivates (also known as ABS, securitization, SIV, etc). Jsmineset.com recently indicated that most recent BIS figures on derivatives going back one reporting period at one quadrillion, one thousand one hundred and forty-four trillion.

The recent collapse and ongoing failure of the OTC derivative market has not only crippled the financial economy but it also ability to redirect monetary inflation away from traditional inflation measures. If the redirection conduit has been closed, where will all the freshly printed money go? Unless a new financial creation arises from Frankenstein’s financial laboratory, history suggests that it will be:

(1) Out of the dollar
(2) Into Gold and precious metals
(3) Despite popular opinion right now, eventually into tangible goods such as commodities, energy, and base metals.

Regards,
CIGA Eric

Jim,

It’s bad enough to be in a car accident, but getting billed for the police and/or fire department response can make matters worse. Your insurance may not cover that.

CIGA Rusty Bayonet

‘Crash taxes’ add hefty fees for aid
By Peter Lewis

Imagine you’re cruising down the road when you hit a patch of black ice and slide into a guardrail. A passing motorist calls 911. Soon firetrucks and police arrive.

Weeks later, a $1,400 bill does, too — for the cost of the police and firefighters who answered the call. What’s worse, it’s not covered by insurance, and it might scar your credit if you ignore it.

Sound implausible? It’s happening in a number of towns, cities and counties in at least 24 states. And given today’s cratering economy (and property-tax revenue), more strapped local governments may be tempted to authorize so-called accident response fees.

More…

Posted at 6:51 PM (CST) by & filed under General Editorial.

Dear Friends,

Taking delivery is one thing, but leaving the delivery at the COMEX is another. Leaving the gold at the COMEX warehouse does something but NOT MUCH. In order to level the playing field you must take the delivery OUT OF the COMEX warehouse.

Do not for a moment buy the disinformation that if you take delivery of a 100 ounce gold bar from the COMEX that is has to be re-assayed to sell it. That is DISINFORMATION as it is a COMEX rule put in to dissuade you from, taking delivery out of the warehouse. You get registered bars by serial number in COMEX delivery exactly how you would get from any international bank. Those bars, after examination, will not be questioned in the selling process away from the COMEX.

I am giving you today the cost of storage of gold at the Zurich Airport Free Zone in SEGREGATED FORM. A German Bank purchased this depository with offices in Switzerland. After having checked every international storage point for you, the charges are reasonable. Shipping it there is totally legal. Having valuables in a safe depository is not having a foreign account. Please confirm that point with your tax or general attorney.

You will shortly get the cost of shipment and insurance by Brinks or a similarly rated shipper of valuable as soon as I am able to compare charges to see you are treated as any other professional would be.

Jim,

I called Tom Kelly whom I spoke with this morning at Brink’s regarding storage. I spoke with him to get information just on transport to and from as follows:

NY to Zurich – he would need to have the exact business info/addresses for to and from locations. Each sealed package/container must not exceed 50-60 pounds and you would need to advise them how many there are. You need to submit this to them via email and it takes a few days to get a response.

Dar-Zurich – he would need to contact their offices with the above information and to get clarification on whether they could actually transport the gold.

Regards,

CIGA Anna

Jim Sinclair’s Commentary

With this information you need not place a financial intermediary between you and your gold. You do not need to buy certificated gold in Australia or send any money to a website.

You handle the entire situation yourself with the help of JB. I will be teaching JB how to see that the gold is properly transferred from COMEX delivery to the shipper, making your life even easier. JB has promised me that he will not solicit your business in speculative dealings but simply aid you in taking delivery and shipping to an international depository where it will be held in segregated form.

Don’t think for a moment that using Australia or the Internet offers you any privacy because if the boys want to know you can be sure the records of an Australian, Canadian or US website can be secured by the proper authority or for that matter any authority today.

I believe in doing things in the light of day.

Please be assured I have no financial relationship with either the depository, the bank that owns it or CIGA JB Slear, either directly or indirectly.

Anyone wishing a sworn affidavit concerning the above will receive it.

Click here to view the depository website for your respective country

Click images to enlarge storage rate data in PDF format.

VAL_LAGER_2008_E_Page_1 VAL_LAGER_2008_E_Page_2 VAL_LAGER_2008_E_Page_3

Trader Dan says:

The more buyers that can be recruited to this effort, particularly buyers of large size, the more difficult the life of the paper shorts will become. Short of taking delivery of the actual metal, preferably pulling it out of the warehouses, the shorts can reign supreme over this market. What’s more – they are doing this with impunity as they pay no price financially to do so and profit quite handsomely I might add. Strip them of the metal and they are cooked. Then they will have to compete on a level playing field like the rest of us. Who was it that said, “He who sells what isn’t his’n, must pay the price or go to prison”? If the paper shorts are selling what doesn’t exist, namely tons of actual gold, forcing them to show us the actual metal will work to modify their behavior.  This is the only way to keep the Comex gold market honest.

Speaking of deliveries, another 307 deliveries were assigned this morning. I can tell you that 43 of those were retenders by Greenwich Capital Markets. The total so far this month is 11,473 contracts or 1,147,300 ounces. I want to see the warehouse totals over the next couple of days before commenting on that. Time is needed to actually move the metal that is going out.

Posted at 6:25 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

When Pakistan blows, which it will, it will cause tremendous dislocation in the Middle East. Crude will rise from wherever it is trading by $100 in 60 days.

India demands Pakistan hand over terror suspects
Tue Dec 2, 7:16 AM
By Ramola Talwar Badam, The Associated Press

MUMBAI, India – India picked up intelligence in recent months that terrorists were plotting attacks against Mumbai targets, an official said Tuesday, as the government demanded that Islamabad hand over suspected terrorists believed living in Pakistan.

A list of about 20 people – including India’s most-wanted man – was submitted to Pakistan’s high commissioner to India on Monday night, said India’s foreign minister, Pranab Mukherjee.

India has already demanded Pakistan take "strong action" against those responsible for the attacks, and the U.S. has pressured Islamabad to cooperate in the investigation. America’s chief diplomat, Secretary of State Condoleezza Rice, will visit India on Wednesday.

The diplomatic wrangling comes as the government faces widespread accusations of security and intelligence failures after suspected Muslim militants carried out a three-day attack across India’s financial capital, killing 172 people and wounding 239.

The only surviving attacker has told police that he and the other nine gunmen had trained for months in camps in Pakistan operated by the banned Pakistani militant group Lashkar-e-Taiba.

More…

Jim Sinclair’s Commentary

Are Narco States reliable sources of energy?

37 killed in Tijuana over 3 days
Toll includes 4 children and 9 decapitated men; police chief fired
The Associated Press
updated 7:27 p.m. MT, Mon., Dec. 1, 2008

TIJUANA, Mexico – At least 37 people were killed over three days in the Mexican border city of Tijuana, including four children caught in shootouts and nine men found decapitated, the state attorney general said Monday.

More than 200 people have been killed in the past month in Tijuana, where officials say rival cells of the Arellano-Felix drug cartel have been waging a bloody battle across the border from San Diego.

Tijuana’s police chief was fired Monday after the wave of violence. A statement from the office of Tijuana Mayor Jorge Ramos says Alberto Capella was replaced by his second-in-command, army Cmdr. Julian Leyzaola.

No reason was given for Capella’s abrupt dismissal.

Baja California state Attorney General Rommel Moreno said three police officers were among the nine decapitated men, whose bodies and heads were discovered in a poor Tijuana neighborhood. Their police credentials were found stuffed in their mouths.

More…

 

Jim Sinclair’s Commentary

There is no doubt about the advent of Fiscal Stimulation, but you can doubt the number on the extremely low side to what is to come by June 2009.

Obama pledges to work with governors on economy

(CNN) — Plagued by rising unemployment, falling tax revenue and increased demand for state services, the nation’s governors met with President-elect Barack Obama and Vice President-elect Joe Biden on Tuesday to press for federal money to ease their fiscal strain.

Obama and Biden told those at the National Governors Association meeting that the federal government needs to build a deeper relationship with the governors in order to put America on the path to long-term prosperity.

"Change is not going to come from Washington alone," Obama said.

"It’s going to come from all of you. It will come from a White House and statehouses all across the country that are working together, and that’s the kind of partnership I that I intend to forge as president of the United States," Obama said at the conference in Philadelphia, Pennsylvania. "I hope that this is the beginning of laying that foundation."

Obama said he wants the governors to help draft his economic plan instead of just helping to implement it.

More…

 

Jim Sinclair’s Commentary

With the cost now at $8.5 Trillion does it not seem that $700 billion is a false flag audit?

$700 billion bailout to get first audit
Government Accountability Office to deliver an oversight report to Congress on the $700 billion bailout plan.
By David Goldman, CNNMoney.com staff writer
December 2, 2008: 6:02 AM ET

NEW YORK (CNNMoney.com) — The federal government’s $700 billion financial rescue plan will get its first official review Tuesday.

The Government Accountability Office will present Congress with a report Tuesday on the bailout’s progress and the Treasury Department’s handling of the program. It is the first of a series of reports that the GAO must submit to lawmakers on a bi-monthly basis, as one of three oversight components required by the Emergency Economic Stability Act.

The bailout has received its fair share of criticism from lawmakers and economists. Some argue that Treasury should require banks to use their capital injections for lending to other financial institutions. With the credit markets still largely frozen, Treasury had hoped the fresh capital would encourage banks to lend, but some have used bailout funds to finance purchases of other institutions instead.

Other critics of the bailout have said the bailout does not address the housing market, which most economists point to as the root of the recent economic downturn.

More…

Jim Sinclair’s Commentary

Look at who is Famous!

DJ MARKET TALK: Comex Gold Moving Inversely To Dollar

1625 GMT [Dow Jones] – Comex gold is modestly higher on a day when the dollar is slightly lower. Feb gold is up $2.60 to $779.40 an ounce. The metal is moving inversely to the greenback at the moment, says J.B. Slear, CEO of Fort Wealth Trading Co. He eventually looks for further gains in gold. "The printing of dollars, and the lack of ability to print gold, will send gold prices higher," he says. Technically, gold could correct downward some more first, he adds. If gold were to close below $746, it could slip to roughly $716, but Slear looks for "very strong support" around this area. "If get up to around $800 by the end of this week, it will be a bullish connotation," he adds. He describes the metal as largely "coiling" sideways since August although in a broad range. (ALS)

More…

 

Jim Sinclair’s Commentary

There is such irony in measuring the drop in credibility of US Treasuries by quoting a measure which is an OTC derivative that is of the kind that was part of the package of crap that caused all the problems in the first place.

What an economic circus is taking place. God help us all.

US Treasury 10-yr CDS hits record high
Mon, Dec 1 2008, 11:34 GMT
http://www.afxnews.com

LONDON, Dec 1 (Reuters) – The spread or risk premium on 10-year U.S. Treasury credit default swaps hit a record high on Monday, extending a recent trend as market participants continued to fret about the scale of the government’s financial rescue programmes.

Ten-year U.S. Treasury CDS widened to 68.4 basis points from Friday’s close of 60 basis points, according to credit data company CMA DataVision.

Five-year Treasury CDS widened to 52.5 basis points from 46 basis points at Friday’s close, it said.

(Reporting by Emelia Sithole-Matarise)
((Reuters Messaging: emelia.sithole.reuters.com@reuters.net,
Email: emelia.sithole@thomsonreuters.com; +44 20 7542 6752)

Jim Sinclair’s Commentary

All I can say to this is Holy S***, these guys are in a total panic and bouncing off the walls.

Treasury Should Consider 100-Year Debt, BlackRock’s Fisher Says
By Thomas R. Keene and Michael J. Moore

Dec. 2 (Bloomberg) — BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion.

“If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview.

The Treasury last month tripled its estimate of planned debt sales in the final three months of the year to a record $550 billion as it attempts to fund bailouts for banks and fiscal stimulus programs to jump start economic growth. Treasury Secretary Henry Paulson told a conference in Washington Nov. 17 that the U.S. will issue some $1.5 trillion worth of Treasury securities in the fiscal year that began Oct. 1.

Fisher, Treasury undersecretary from August 2001 to October 2003, eliminated 30-year bond auctions in 2001 to reduce government borrowing costs after four years of federal budget surpluses. The U.S. hasn’t been in the black since. The government revived sales of the security in February 2006.

Treasury yields have plummeted as investors have flocked to the safety of U.S. government debt during the worst financial crisis since the Great Depression. Bonds rallied for a fourth day yesterday, sending yields on two-, 10- and 30-year debt to the lowest since the Treasury began regular sales of the securities.

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Posted at 6:15 PM (CST) by & filed under Jim's Mailbox.

Jim,

Your recent comment on Quantitative Easing cited an article "M3 where Art Thou" which used a 2008 graph of M3 from Capital Economics/Lombard Street Research which is so different from the figures estimated by both Shadowstats.com and Nowandfutures.com that clarification of who is right is essential for an understanding of what is happening to M3 and its related effects.

CIGA Ron M

Dear Ron,

Who do you think? The Establishment entity or those who have kept the calculations pristine from change and politically motivated adjustments. The answer to your question is that Shadowstats.com gives a more accurate M3.

Regards,
Jim

Jim,

I would really hate to see a VAT but agree it is probably coming.

Monty Guild
www.GuildInvestment.com

A European-style tax?
Like it or not, there’s only one way we’re going to be able to pay for our ballooning deficit: a value-added tax.
By Shawn Tully, editor at large
Last Updated: December 2, 2008: 9:27 AM ET

NEW YORK (Fortune) — It’s highly possible, if not inevitable, that Americans will soon live under a radically different tax system – one that the pundits and politicians aren’t talking about.

It’s called a value-added tax, or VAT, and it’s been used for decades to pay the bills and sustain the immense growth of governments around the world, from France to Mexico to Australia. Created in 1954 by a French economist, the VAT is the most potent, efficient machine for revenue generation yet invented.

And if there’s one thing the U.S. government needs as the federal budget balloons, it’s a ton of new revenue. "The bottom line is that the income tax cannot support the level of spending that’s projected, something other countries faced years ago," said Roberton Williams of the Tax Policy Center, a non-partisan research institute. Today the VAT raises almost half of the total government revenue in France, and a similar share in most of the developed world.

More…