Posted at 12:49 PM (CST) by & filed under General Editorial.

Dear CIGAs,

1. Today’s news on the cost of mining and infrastructure is in my opinion posturing for meetings between the Chamber of Mines and the Presidential Committee on Mining Revenue next week.

2. High costs can be a product of a company having sold the gold production of their mine forward 10 years in order to obtain non-recourse loans. The price of gold would then be delivered against those sales forward and used in the calculation of income in order to derive costs of mining according to International, Canadian and US Generally Accepted Accounting Principles (GAAP).

3. The infrastructure in Tanzania from Mwanza to Dar es Salaam is excellent.

4. A main high power electrical grid and delivery system exists in the area of Mwanza and can service multiple mines.

5. Gold can be shipped via air. This is most certainly true if you own multiple large aircraft yourself.

6. In my opinion mining costs in Tanzania are among the lowest in the world, especially if you have an open pit potential to finance your future underground operations.

Regards,
Jim

Posted at 9:48 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Linked below are a few charts showing the custodial account treasury holdings and agency holdings. If there is any wonder why the bond market is experiencing a once-in-a-generation bubble, just look at the Treasury Holdings chart. It is going vertical. Meanwhile, the chart showing the Agency debt holdings such as Fannie Mae and Freddie Mac continues its “fall off a cliff” imitation. Foreign Central Banks are dropping Fannie and Freddie debt like a bad habit and rushing into US Treasuries. I keep wondering just who it is that is supposed to provide the capital for Fannie and Freddie to function! The feds supposedly dumped $200 billion into them if I recall correctly but foreign Central Banks have already unloaded $120 billion. At the rate the FCB’s are ditching the debt, it looks like it is a wash and we are back to where Fannie and Freddie were in July.

I read these charts as an indicator as to just how dire is the condition of the world’s current monetary system. If any of these foreign Central Banks balks at buying US Treasuries or even whisper about selling them, Katie bar the door on the US Dollar. Still, I think it is just a matter of time before the US has to devalue the dollar if it ever hopes to make good on these ever-increasing obligations. It reminds me of one of those old biology films we used to watch back in school when the virus would divide and just keep on dividing and dividing and dividing. Maybe we could rename US Treasury bonds to US Treasury viruses – They just keep on multiplying until they suck the life out of their host.

Also, note the yield charts on the 3 month and the 10 year. The three month is effectively at zero. I have not shown them but the one month is at 0.01% and the one year is at 0.61%.

Talk about zero bound… Quantitative Easing, here we come with a vengeance. They have no other choice.

Trader Dan


Click here to view today’s Custodial Holdings, 3 Month Money and Ten Year Treasury charts with commentary from Trader Dan Norcini

Posted at 6:28 PM (CST) by & filed under Jim's Mailbox.

Jim,

I did a little checking about  the memorandum you put up today…"

MEMORANDUM TO ALL AMERICAN EAGLE AND AMERICAN BUFFALO BULLION COIN AUTHORIZED PURCHASERS
SUBJECT: 2008 and 2009-Dated Bullion Coin Products
November 24, 2008

"With the exception of the American Eagle Gold One-Ounce and American Eagle Silver One-Ounce Bullion Coins, all 2008-dated bullion coins have been depleted. Weekly allocations will continue for these two products…."

A very good friend of mine at one of the premier coin and bullion shops in the country says he has not gotten Gold Eagles for at least 2 months.  As far as Silver Eagles,  he says he is getting maybe 500 every two weeks.  My friend says that  compared to the past the availability of Silver Eagles That amount is just a "trickle".  

Your friend,
Greg Hunter

Posted at 5:16 PM (CST) by & filed under General Editorial.

Dear Friends,

First Bernanke then Paulson speaks about helping mortgagees.

During all of this Nardelli of Chrysler was forced to grovel in public for the measly fee of about $14 billion.

The net result was at the end of Motors being grilled by our beloved clueless legislative, the Dow once again regurgitated.

What a difference between how Washington treats Wall Street and Main Street. Wall Street gets the silk glove treatment while Main Street gets the hob nail boot directly in the ass. Talk about irony. The blue collars are the salt of the earth and foundation of this country.

Where was Senator Shelby of the Banking Committee when the bailout of $8.5 trillion was embarked on for financial entities? Senator Shelby said screw Motors but never said screw the banks who also have a crappy business plan. You think the banks are now clear of all busted OTC derivatives? Like hell they are.

Now that this slippery road of bailouts has been taken, not helping Motors get to 2009 is going to result in millions more out of work when you deluge, not trickle, down the line to suppliers, auto retailers, used auto sales and general economic perspective.

The executives of the motor companies, according to markets, are weaklings. The legislative is clueless, Paulson is without market respect and Bernanke is simply ignored.

Not helping Motors will land Obama with a totally insolvable economic problem that will tank his Administration before it even starts.

The dollar is DEAD but simply does not know it yet.

What a mess. God help us all.

Respectfully yours,
Jim

 

 

Truth Be Known:

Hyper-inflation is a currency event – not a velocity of money or economic activity motivated occurrence.

Gold is a currency , not a commodity. Gold was a perfect currency at $248 and will be so at $1650.

UN team warns of hard landing for dollar
By Harvey Morris in New York
Financial Times, 1 Dec 2008

The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.

In their annual report on the world economy published on Monday, the economists said the dollar’s sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.

The overall trend remained a downward one, however, reflecting perceptions that the US debt position was approaching unsustainable levels. An accelerated fall of the dollar could bring new turmoil to financial markets.

"Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the US economy into a hard landing and pulling the global economy into a deeper recession," the report said.

Publication of the annual survey by the UN’s Department of Economic and Social Affairs, its trade organisation Unctad and UN regional bodies, was brought forward by a month in the light of the financial crisis. It was launched in Doha to coincide with the UN-sponsored development financing conference in the Qatari capital.

More…

Posted at 10:46 AM (CST) by & filed under In The News.

Dear CIGAs,

You think the bailed out financial entities are viable businesses in the face of current and future circumstances?

No pleading was required by the good ole boys at the banks and brokerage houses. They were not asked to surrender their first born.

In that sense with the number of job involved in this it is good for motors.

Standing down would be a better approach than begging.

The politicos will panic when they find out the bankruptcy papers have already been written and would have been utilized if it had been a standoff.

What is good for the financial geeks is good for lousy manager’s gander.

GM, Chrysler considering bankruptcy to get bailout report
Thu Dec 4, 2008 8:06am EST reuters

(Reuters) – General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi-billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.

In response to automakers’ bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the sector without liquidation, Bloomberg said.

General Motors and Chrysler could not be immediately reached for comment by Reuters.

Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.

More…

 

Jim Sinclair’s Commentary

Another tidbit from Alf Fields:

Commentary From Alf Fields:

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 $700 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)

We have already blown through waves one and two. Wave three is projecting out to $3500 and wave 5 to $10,000 for an ounce of gold. This is the point. Last year we had a $400 billion deficit. Next year we will have a $2.5 trillion deficit and in the next four years a minimum of $10 trillion deficit. It is not hard now to see why the price of gold would go to $10,000 per ounce.

What this means is that the Federal government will burn the house down printing dollars which will lose value at a dizzying rate. Conveniently, this unbridled printing will allow the US government to pay all its bills domestically and to foreign holdings by simply printing away debt. This will also have a massively negative impact on all our creditor nations. I would not be surprised if they ended up in far worse shape than us.

We have seen it time after time when a big debtor runs its creditors into the ground and ends up smelling like a rose. This is most likely what will happen to the US although the citizenry will also go through some real tough times.

What to do? Find those asset classes which will hold their value during this process. It sounds ridiculous, but it is that simple and you will prosper.

Elliott Wave Gold Update 23
By Alf Field Dec 2 2008 10:39AM
http://www.kitco.com/

 

Jim Sinclair’s Commentary

The source is not exactly the Financial Times, but the idea is intriguing.

DESTRUCTIVE BET HEDGING SCHEMES CONTINUE
By emsnews

Now, everyone is screaming bloody murder and there is only one solution: arrest them all!

More…

Posted at 11:49 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The Comex tells us gold is easily available, like rain in the summer. The US Mint tells us that real gold is scarce.

The manipulators must be taken out to the shed.

Comrades in Golden Arms, take physical delivery.

Just say NO to these demons that inhabit all our markets. It is time to discipline Sodom and Gomorrah, the COMEX.

MEMORANDUM TO ALL AMERICAN EAGLE AND AMERICAN BUFFALO BULLION COIN AUTHORIZED PURCHASERS
SUBJECT: 2008 and 2009-Dated Bullion Coin Products
November 24, 2008

With the exception of the American Eagle Gold One-Ounce and American Eagle Silver One-Ounce Bullion Coins, all 2008-dated bullion coins have been depleted. Weekly allocations will continue for these two products.

The final 2008 allocation for these coins will be provided on Monday, December 15, 2008.

There will be no bullion allocations during the week of December 22, 2008.

2009-dated American Eagle Gold One-Ounce and American Eagle Silver One-Ounce Bullion Coins will be made available for sale via the standard allocation process on Monday, December 29, for pricing December 30 and order pick-up on Friday, January 2, 2009.

Allocations for these products will continue until the United States Mint is able to meet demand.

The quantities of blanks that we have been able to acquire from our suppliers continue to be very limited, while demand for bullion coins remains high. As a result, it is necessary for the United States Mint to delay the launch of other bullion coins until later in 2009. We will continue to monitor the situation and keep you informed as additional information becomes available.

Thank you for your patience and your continued support of the United States Mint Bullion Coin Program.

The above mentioned coins should not be confused with the American Eagle or American Buffalo collector proof and uncirculated versions sold directly on the Mint?s website. However, these coins are also quickly becoming exhausted, as is evident from the chart of gold and platinum coins listed at U.S. Mint Collector Bullion Coin Prices, Premiums and Sales Figures.

Jim Sinclair’s Commentary

One way or another Pakistan will light the fuse that many of our Conservative Christian friends will see as the "End of Days." Let us hope it is not. Pakistan is the fulcrum point of the next major world explosion, as was 9/11. The make believe government of Pakistan is not the miscreant in this equation.

What is to come will be well in place by January 14th, 2011.

Could India-Pakistan conflict go nuclear?
MARTIN SCHRAM

Once again, terrorists struck, slaughtering 174 people in Mumbai in a crisis that may have been malevolently designed to blast the adversarial nuclear neighbors India and Pakistan into war.

Once again, world leaders fear that another conventional war between India and Pakistan could go nuclear — even as both governments utter all the usual assurances that they can keep their nukes under control.

Once again, world leaders need to recall the frighteningly candid words of a former Pakistan Army general who explained to me years ago how in a conventional weapons clash between India and Pakistan, even a well-intentioned, highly-trained general such as he was could inadvertently start a nuclear war. And how the initial nuclear launch would not only be responded to but would instantly escalate tenfold — a catastrophe that would not only obliterate the region but would have severe global consequences

The warning spoken by retired Brig. Gen. Feroz Khan in my interview with him in 2002 reads like a warning call today. We spoke at a time when India and Pakistan seemed headed toward yet another ground war over the disputed bucolic region of Kashmir — after Pakistan-based guerrillas of Lashkar-i-Taiba attacked India’s Parliament. Now India says last month’s Mumbai murderers were trained inside Pakistan by the same militant group, which is linked to elements of Pakistan intelligence.

"Once the conventional war breaks out, the fog of war sets in," Khan said then. "And during war you have deceptions. You have misperceptions. You have communications breakdowns. Things get heated up."

More…

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