Posted at 12:39 PM (CST) by & filed under General Editorial.

Dear CIGAs,

This can easily put gold up in excess of $100 in a day. I have seen gold rise $150 in a day for much less in 1980.

The key element here is that securitized collateralized debt has little good collateral. This is what the emergency meeting at the New York Fed in 2008 was all about.

I have told you about that meeting multiple times since 2008.

This is the greatest fraud in the history of man. The you know what has hit the fan.

Posted at 12:04 PM (CST) by & filed under General Editorial.

Dear CIGAs,

It is all over. Gold is going to and through $1650.

The people who know it has hit the fan are the OTC derivative manufacturers and distributors. They are the buyers of gold in huge tonne chucks in the cash market.

QE to infinity is absolutely in the cards.

Yesterday I emailed all of you who are on the free JSMineset email list concerning the Kentucky RICO civil suits that speak clearly and directly to the fact that securitized (collateralized) debt on mortgages is a can of worms with many mortgages having no paperwork, lost paperwork or paperwork that has been duplicated many times in many collateral debt instruments.

Goldman is now being sued over collateral debt obligations, those items I have referred to as without good collateral.

The you know what has hit the fan and Gold is being bought by the devils themselves. The ill gotten gains of OTC derivatives are taking cash gold from producers and markets by the tonne.

Gold is going right through $1650, an opinion I have held publicly for more than 8 years, on or before January 14th, 2011.

Goldman Sachs Sued Over German Bank’s $37 Million Loss on CDO
By Edvard Pettersson and Patricia Hurtado – Oct 4, 2010 10:01 PM MT

Goldman Sachs Group Inc., which served as the placement agent for a collateralized debt obligation named Davis Square Funding VI, was sued by Landesbank Baden-Wuerttemberg over its $37 million loss on the investment.

The CDO held 95 percent residential mortgage-backed securities, of which 33 percent were subprime and 46 percent were “midprime,” the German bank said in a complaint filed yesterday in federal court in Manhattan. TCW Group Inc., the investment adviser on the CDO, was also sued by the bank.

When Goldman sold the investments to a Luxembourg affiliate of LBBW in March 2006, they were represented as “safe, secure, and nearly risk free,” according to the complaint. At the same time, Goldman senior executives privately observed that “it was game over” for subprime lenders and were reducing their exposure to the mortgages, LBBW said.

“Goldman knew at the highest levels of its organization that its representations to LBBW Luxemburg that the notes merited triple-A ratings and were high grade were blatantly false,” the Stuttgart-based bank said. “Goldman committed fraud and, or, was negligent in marketing and selling the notes to LBBW Luxemburg.”

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Posted at 2:18 AM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

Please note one of the reasons that gold is still continuing to attract buying on dips in price…

Trader Dan

Super Rich Investors Buy Gold By Ton
By Laura MacInnis
GENEVA | Mon Oct 4, 2010 1:13pm EDT

GENEVA (Reuters) – The world’s wealthiest people have responded to economic worries by buying gold by the bar — and sometimes by the ton — and by moving assets out of the financial system, bankers catering to the very rich said on Monday.

Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

"They don’t only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank’s services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week.

"We had a clear example of a couple buying over a ton of gold … and carrying it to another place," Stadler said. At today’s prices, that shipment would be worth about $42 million.

Julius Baer’s chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lackluster U.S. data and amid concerns about currency weakness.

"I see gold as an insurance," Van Anantha-Nageswaran said. "I recommend 10 percent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals."

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Posted at 4:52 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The following is BREAKING NEWS:

Racketeering suits (RICO), now as civil class action suits in two states, have hit the nail on the head. The civil suit says the banks do not have proper title to the homes on which they are foreclosing. This by direct inference questions if securitized debt on mortgages have real collateral behind them.

Simply stated a long time ago by Marie McDonnell and myself, THEY DO NOT.

That means legacy assets are cooked, dead, and worthless, yet are now marked up in value to cost and above. This is all thanks to FASB’s capitulation that now represents a large amount of capital for the Western world’s financial entities.

The you know what hit the fan today for those that understand. October 4th 2010, the essence of securitized debt on mortgages died!

That alone gives you gold at $1650.

Posted at 2:28 PM (CST) by & filed under In The News.

Thought For The Day.

Brazil has elected a professional clown to congress.

That is not new news. America has been doing that for years.

Clown Wins Congressional Election In Brazil
October 4, 2010

A candidate for Congress in Brazil wasn’t clowing around. He won office in a landslide over the weekend. His name is Francisco Everardo Oliveira Silva. He’s better known by his clown name Tiririca, which means grumpy.

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Jim Sinclair’s Commentary

If you haven’t already, take a look at this video featuring Dr. Ron Paul on eliminating the Federal Reserve.

Jim Sinclair’s Commentary

The game I outlined to you on follow the money to understand what happened with rescue money and fake mark up profits of trash assets is as true in Switzerland as it is in the USA.

Don’t rule out that all major financial entities in the Western world will need another bailout.

Don’t Rule Out Swiss Banking Bailout, Despite Tougher Capital Rules
OCTOBER 4, 2010, 10:01 AM GMT
By Goran Mijuk

The Swiss, fearing their economy could collapse under the failure of one of their large banks, have roughly doubled up capital requirements for UBS and Credit Suisse, asking each bank to hold some 75 billion Swiss francs in capital, in common equity and new financial instruments called contingent convertible bonds.

The strict rules, known as “Swiss finish” to the new Basel III banking rules, are, however, less stringent than many investors and analysts had feared, because the amount of common equity to be held by the two banks is only slightly higher than prescribed under the international rules.

Instead of holding 7% in common equity against risk-weighted assets, UBS and Credit Suisse will have to own 10% of common equity, something which both banks are expected to attain shortly after the new measures are expected to come into effect in 2013.

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Jim Sinclair’s Commentary

Here is a pregnant crisis just waiting to give delivery of another spiritual experience to the Western world.

Credit default swaps are truly the spawn of Satan. They grow and grow until they have consumed all life on planet Earth. Rumor has it this is what ended life on Mars.

DERIVATIVES: Rates compression hits US$40trillon
04 October 2010

Notional volume of interest rate swap terminations has hit more than US$40trn so far this year, easily surpassing the US$26.7trn completed through the whole of 2009 according to the latest figures from derivatives trade processing company TriOptima.

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Jim Sinclair’s Commentary

First all is getting better, then things are recovering slowly, and now the USA is stuck as in going sideways.

Next comes the admission of an economic freefall.

IMF admits that the West is stuck in near depression
If you strip away the political correctness, Chapter Three of the IMF’s World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time.
By Ambrose Evans-Pritchard
Published: 8:00PM BST 03 Oct 2010

The IMF report – "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation" – implicitly argues that austerity will do more damage than so far admitted.

Normally, tightening of 1pc of GDP in one country leads to a 0.5pc loss of growth after two years. It is another story when half the globe is in trouble and tightening in lockstep. Lost growth would be double if interest rates are already zero, and if everybody cuts spending at once.

"Not all countries can reduce the value of their currency and increase net exports at the same time," it said. Nobel economist Joe Stiglitz goes further, warning that damn may break altogether in parts of Europe, setting off a "death spiral".

The Fund said damage also doubles for states that cannot cut rates or devalue – think Spain, Portugal, Ireland, Greece, and Italy, all trapped in EMU at overvalued exchange rates.

"A fall in the value of the currency plays a key role in softening the impact. The result is consistent with standard Mundell-Fleming theory that fiscal multipliers are larger in economies with fixed exchange rate regimes." Exactly.

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Jim Sinclair’s Commentary

The fizz is out of the bottle for fiscal and monetary stimulus.

Cheap Debt for Corporations Fails to Spur Economy
By GRAHAM BOWLEY
Published: October 3, 2010

As many households and small businesses are being turned away by bank loan officers, large corporations are borrowing vast sums of money for next to nothing — simply because they can.

Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.

The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.

This situation underscores the limits of Washington policy makers’ power to stimulate the economy. The Federal Reserve has held official interest rates near zero for almost two years, which allows corporations to sell bonds with only slightly higher returns — even below 1 percent. But most companies are not doing what the easy monetary policy was intended to get them to do: invest and create jobs.

The Fed’s low rates have in fact hurt many Americans, especially retirees whose incomes from savings have fallen substantially. Big companies like Johnson & Johnson, PepsiCo and I.B.M. seem to have been among the major beneficiaries.

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Jim Sinclair’s Commentary

This is an interesting, but not necessarily a viable comparison, but the point he is making is correct

‘Black Swan’ Author Says Dubai More Robust Than U.S.
October 04, 2010, 5:12 AM EDT
By Camilla Hall

(Updates with quote in second paragraph)

Oct. 4 (Bloomberg) — Nassim Nicholas Taleb, whose book “The Black Swan” described how unforeseen events can roil global markets, said Dubai’s economy is more robust than that of the U.S. as its debt problem can be “controlled.”

“Even if you take perhaps the worst of emerging markets, a place like Dubai, you realize Dubai is more robust than the United States,” Taleb said at a mutual funds conference in Manama, Bahrain today. “Dubai has been borrowing to put buildings on postcards. It can stop that, but America needs to borrow just to open the doors in the morning. That’s why I’m not comfortable with the United States.”

Prior to the collapse of Lehman Brothers Holdings Inc. in September 2008, Taleb warned that bankers were relying too much on probability models and were disregarding the potential for unexpected catastrophes. His book labeled these events black swans, referring to the widely held belief that only white swans existed until black ones were discovered in Australia in 1697, and said that they were becoming more severe.

“Dubai, they’re not depending on debt, it’s not a chronic debt, it’s not like the American person who has this dependency on debt and has been building it since the 80s,” Taleb, a former derivatives trader, said. “It’s not a great model but it’s more robust than the United States, simply because their debt situation can be controlled a lot better than the U.S.”

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Jim Sinclair’s Commentary

Do you want to deposit your gold in the gold banks?

Not me. That is truly sleeping with the enemy.

J.P. Morgan reopens vault amid gold demand: report
By Myra P. Saefong
Oct. 3, 2010, 9:34 p.m. EDT

TOKYO (MarketWatch) — J.P. Morgan Chase & Co. has reopened an underground gold vault in New York amid soaring demand and prices for gold bullion, according to a report in The Financial Times published Sunday. The vault had been closed since the 1990s. Deutsche Bank AG and Barclays PLC’s, Barclays Capital are also considering opening new vaults in London, the report said. J.P. Morgan opened its first vault in Asia for precious-metals storage in Singapore late last month. Meanwhile, prices for gold continue to climb, with gold for December delivery up $1.50 at $1,319.30 an ounce on Globex in Tokyo’s Monday morning trading. The contract closed at a record $1,317.80 in New York on Friday after tapping a high of $1,322.

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Posted at 12:35 PM (CST) by & filed under Greg Hunter, USAWatchdog.com.

(Courtesy of Greg Hunter of www.USAWatchdog.com)

Dear CIGAs,

This weekend, Bank of America became the latest lender to delay all foreclosures in 23 states because of possible problems with the necessary documents needed to repossess a home.  GMAC Mortgage and JP Morgan Chase have had similar problems recently with documents that prove the bank has the right to foreclose.   ADINews.com posted a statement from B of A, “We have been assessing our existing processes. To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures,” BofA spokesman Dan Frahm said in a statement.”  (Click here for the entire ADINews.com story.)

Florida Congressman Alan Grayson says the foreclosure document “problem” is really fraud on a massive scale.  He calls what is happening now a “foreclosure fraud crisis” that could affect 60 million properties in the U.S.  It is all because the banks have lost track of promissory notes signed by the homeowners.  I was the first mainstream media reporter to do a story on this problem in 2008.  (Click here for the 2008 “Produce the Note” story from CNN.)    Back then, some big banks could not “produce the note” that proved it had the right to take back a home.  The problem has gotten much bigger as more homeowners discover the banks do not have the original documents. 

After physical paperwork was filled out and signed by the borrower, the banks electronically filed the paperwork into a computerized system called the “Mortgage Electronic Registry System” (MERS).   According to Congressman Grayson, 60%, or 60 million, mortgages are in MERS.  The banks lost track of the original paperwork, the note, signed by the borrower.  That is what actually proves the bank owns the property.  Grayson says, “It appears that on a widespread and probably pervasive basis they (the banks) did not take the steps necessary to own the note . . . which means that in 45 out of the 50 states they lack the legal right to foreclose. . . .  So they have simply created a system where servicers hire foreclosure mill law firms whose business is to forge documents showing or purporting to show they have a legal right to foreclose.”  (Click here for the entire Congressman Grayson video statement from 9/30/10.)  

Please take a moment and grasp the enormity of this problem for the banks.  There are 60 million homes which banks loaned money on, and now they might not be able to legally get the property back if the homeowner defaults!  Another colossal problem for the banks is the trillions of dollars in mortgages bundled into securities.  Remember, the banks were giving anyone who could fog a mirror a mortgage which allowed them to create and sell lucrative mortgage backed securities.  So, there are trillions of dollars in mortgage backed securities that now could have NO backing!   Would you like to be the pension fund manager who bought that security?  Do you think this just might cause an accounting problem for the banks?  Do you think this could push some of the big banks into bankruptcy?  Will there be another financial meltdown and government rescue?

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