Posted at 7:36 AM (CST) by & filed under Jim's Mailbox.

Fair consideration as both Donald and the Fed are wrong on the economy.




I believe it’s more about the direction (hence velocity) of monetary infusion.

Trump would have point here.

Trillions in QE went into the banking system as reserves that were never lent out.

The money never went directly into the economy.

Why else would trillions in QE not propagate inflation?

“What happens if Trump bullies the Fed into accepting his higher growth rates which he achieves by boosting government spending and borrowing billions? Could it happen in the first place?

Yes it could. In the 1970s, Richard Nixon bullied the Fed into printing money so that he could win the 1972 election. It can happen because it has happened. This would mean that all the old rules go out the window. American wages would rise much quicker than they have in the past few decades. The average guy will feel richer and then he will be persuaded to vote for Trump again. Wall Street would wobble and the stock market fall, but the vast majority of people don’t own stocks, so they won’t care. And Trump will get his re-election and the only people who will squeal in the short term are rich bankers and investors on CNBC.”

Printing cash would be directed directly towards Main Street, create velocity, and hence inflation.

He would be correct. Money has been put into wrong pockets.

CIGA Wolfgang Rech

When Trump Turns On The Enemy Within — The Fed
April 17, 2017

So the first one hundred days of Donald Trump have nearly passed and there seems to be a sense that, despite all his initial maverick positions, the country feels like it’s under a typical Republican President.

Russia is again the enemy number one; intervention in the Middle East is ongoing with the usual American “regime change” objective; and NATO, which was said to be obsolete a few weeks ago, is now an indispensable ally. At home, talk of the much more pleasant tax cuts has replaced the most extreme rhetoric of scrapping Obamacare and even corporate America and Wall Street — both implacable enemies during the campaign, now look set to be left alone.

So, normal service has been resumed. Or has it?


You think the Fed may have made a mistake just as they did in 30s?


Neiman Marcus Is Now Borrowing Money To Make Interest Payments On Its Debt
April 21, 2017

A rolling loan gathers no loss.

That appears to be the adage guiding upscale department-store chain Neiman Marcus, which has opted to make the coming interest payments on its high-yield bonds by issuing more debt, instead of burning through cash.

The company said it was electing the payment-in-kind (PIK) option on its $600 million in 8.75% notes due to mature in 2021 for the coming six-month coupon period through Oct. 14, according to a filing with the Securities and Exchange Commission. The move is aimed at enhancing its liquidity, the Dallas-based company said. It will pay PIK interest at a rate of 9.50% for the interest period, which started on April 15. The current yield on the benchmark 10-year Treasury is just 2.20%.



Everybody was long the dollar! And everybody is short the euro! So which asset class will win? AU and AG! Paper is over.


Goldman Sachs: We’re Closing Two Of Our Long-Dollar ‘Top Trades’
April 19, 2017

Goldman Sachs is closing two long-dollar “top trade” calls, both of which would have posted losses, the bank said in a note on Tuesday.

“In recent years we have generally maintained a bullish dollar view, and the greenback still has a number of things going for it, including a healthy domestic economy, an active central bank, and lower political uncertainty compared with the U.K. and euro area,” the note said. “However, a number of fundamentals have changed on the margin, such that the long-dollar story no longer warrants a place among our ‘Top Trades.'”

The trades, which it initiated in mid-November, were a long dollar plays against the euro and the pound as well as going long the dollar/yuan via a 12-month non-deliverable forward (NDF), Zach Pandl, a senior U.S. economist at the bank, said in the note.


Posted at 5:18 PM (CST) by & filed under Jim's Mailbox.

The Fed will have to admit defeat

If is not in May it will very likely be in June. When the Fed will finally be forced to be honest and admit that it is wrong on the economy and therefore will have to drop its tighter monetary policy with as consequence that precious metals assets will skyrocket. A U-Turn by the Fed changing their policy direction from tightening to easing will create a massive market shock. That day is rapidly approaching.

As Michael Belkin says “financial markets are a case of the blind leading the blind. The Fed keeps talking economic strength and has broadcast a series of interest rate hikes and even balance sheet reductions, those consensus trades have virtually all market participants incorrectly positioned.” This is in my point of view because almost everybody got drugged for the last 8 years and thus lost perspective of what is real and what isn’t.

That the Fed will have to ease instead of tighten is something I and with me several more people have been arguing the last couple of years. As they say when you are too far ahead of foreseeing what will happen you are regarded as a knucklehead whilst if you predict the situation a few weeks before it happens you are viewed as a genius. The reason for a U-Turn is that according to my and other people’s perception the economy was and is very weak whilst the Fed is trying to portray, using manipulated economic figures, a strong economy to try and boost consumer confidence hoping the economy will find traction. Though this hope has been in vain and hence the Fed has become a prisoner of its own falsifications and realistically can’t increase interest rates and most likely will have to cut interest rates again rocking the investors’ community. In my point of view the only Fed statistics that come close to what the real situation on Main Street is are those of the Atlanta Fed.

The Atlanta Fed is now forecasting GDP growth of 0.5% for 1Q17

On April 17 the Atlanta and New York Reserve Banks downgraded their outlook for U.S. economic growth for the first quarter after disappointing data on retail sales. The U.S. Commerce Department reported retail sales falling 0.2% in March following a 0.3% decrease in February, which was the first and biggest decline in nearly a year. As a result the Atlanta Fed reduced first-quarter gross domestic product, GDPNow, to 0.5% down from the 0.6% growth rate calculated on April 7. On April 17 the New York Fed also downgraded first-quarter GDP at 2.09% from 2.56% a week earlier (quite a reduction!).

The next GDPNow update is Thursday, April 27. clip_image002

Anyway just see on the chart here above how out of whack the forecast of the industry analysts are with GDP forecast for the first quarter of between 1%-2% or between 2x-4x more than the Atlanta Fed is forecasting. Wall Street is always too late in their downgrades because of their positive bias, followed for obvious reasons, Wall Street makes more money with a positive than a negative stance.

In my point of view it all is pretty simple. People just simply don’t want to further increase their debts in order to buy goods they already have. The numerous vacant stores in New York, even not seen in the 2008/2009 period, are a clear testimony to that. I believe the fact that Ralph Lauren, a popular brand amongst Americans and foreigners, is closing its flagship store on Fifth Avenue is a clear sign of this trend. People are just fully saturated with debt and consumer goods, people are maxed out. No room left! And just recently the BofA in its almighty wisdom “concluded” that surging consumer confidence does not result in higher spending hence why the retail sector is doing so badly. And as we all know consumer-spending accounts for 70% of GDP in the US. Just draw your own conclusion. You can bring a horse to the water but you can’t make it drink and especially not when it doesn’t trust the water!

Dallas Fed president still talking about 3 hikes being a good baseline!

And despite this all the Dallas Federal Reserve President Robert Kaplan said on Thursday April 20 that two more interest rate hikes this year remains possible but that the U.S. central bank has the flexibility to wait and see how the economy unfolds. “Three rate increases this year…is still a good baseline. If the economy develops a little more slowly, then we can do less than that and if the economy is a little stronger, we can do more than that,” Kaplan said in an interview with Bloomberg TV. This guy is living in La La Land. Following the abovementioned GDP figures 2 or 3 further interest rate hikes indicated by the Fed are out of the question in my point of view! The economy just can’t take it. And now Goldman Sachs is suddenly starting to get cold feet and in a note released overnight, the firm’s chief economist Jan Hatzius says that “we have become a bit less confident about near-term hikes.” Is this what they call “hedging” (I am facetious of course)? Anyway we will soon witness what the outcome will be. The next meeting will be May 2-3 followed by a meeting on June 13-14 see dates below.

FOMC Meeting Dates For 2017

Month Date
January/February 31-1
March 14-15*
May 2-3
June 13-14*
July 25-26
September 19-20*
October/November 31-1
December 12-13*

*Meeting associated with a Summary of Economic Projections and a press conference by the Chair.

Fundamentals and market valuations are worrisome

With the diminishing returns from the QEs and ultra low interest rates, an U6 unemployment figure of 22.5% (ShadowStats), a record 95m Americans not in labor force (the number grew 18% since 2009) and according to a recent Bankrate survey of 1,000 adults, 57% of Americans that don’t have enough cash to cover a mere $500 unexpected expense, the outlook for the economy is not good to say it at the least.

The last time continuing jobless claims, just published, was this low, or 1.979 million, the Nasdaq peaked at the end of the dotcom boom and collapsed over 80% in the next 2 years. One has to wonder that despite a slump in industrial production we had the ‘best’ continuing jobless claims print since April 2000 tumbling to 1.979 million. You know why in my opinion? Because people are so disillusioned that they have given up looking for jobs, hence why the labor participation rate is at historic lows. Unemployment rate 4.5%! don’t make me laugh it is a concoction of that liar in chief Obama. According to a new study from the Census Bureau, roughly one-third of all millennials live at home with their parents and one-fourth of them can’t be bothered with enrolling in school or finding a job.




Foto: Business Insider/Andy Kiersz, data from Bureau of Labor Statistics

Next to the weak fundamentals the markets are very overvalued. The Q or Buffett ratio, standing for the stock market valuation ($22.6trn) divided by the total size of the economy ($18.8trn) puts the Buffett valuation at around 1.2x, meaning the stock market is about 20% pricier than the entire US economy. According to Yale finance professor Robert Shiller the S&P 500 SPX is now trading on a cyclically adjusted price-to-earnings (cape) ratio of 30x, compared to a historic fair value for this measure of about 16x. In other words prices are very lofty and thus very vulnerable to shocks.

Dollar at crucial levels and so are gold and silver

When the Fed will finally admit to the weakening of the economy thereby frustrating further rate hikes and possibly triggering a rate cut the financial markets and US dollar could end up falling significantly. Though most likely in anticipation the markets will front run the Fed and weaken the US dollar in advance of any announcements by the Fed. Another important factor that could contribute to a much weaker dollar in this respect is the fact that on April 9 net Treasury futures shorts were back to their lowest levels since early December 2016 whilst traders continued to pile into the massively short-end betting on further rate hikes as Eurodollar shorts push on beyond $3 trillion. This is often a contra indicator of how the currency will react when too many positions are taken in one direction. The vulnerability of those trades often rises significantly when positions reach extreme proportions and often result in the opposite outcome because of the need of immediate covering before others do when high expectations are not met in order to limit losses.

So instead of being regarded a beacon of strength the US dollar is most likely to lose its luster. I think people start to lose their trust in the financial system and are looking for an asset class which attractiveness stands on its own and is not determined by fake statistics. Although we all know that the Fed, the BIS and the bullion banks have been defending the US dollar by discouraging investors to invest in gold and silver the fundamentals for gold and silver are now catching up (just look at the tug of war in the futures market) and there is no place to hide anymore for the scam artists.

And because the central banks will lose their status of lender of last resort because they have undermined the economies and currencies investors will resort to the ultimate lender of last resort: physical gold and silver. The upcoming weakness in the US dollar, which is inversely correlated to gold, will force deliveries of physical gold on the Comex instead of the usual nominal settlements in US dollars which in turn will force the price of gold and silver to multiples of their present value.

And the outlook for the US dollar is I believe supported by the charts that are kind of indicating the weakness in the US dollar and the strength of gold and silver. As we can see on the US dollar chart below the 99 level being the 200-day moving average is quite crucial for the direction of the US dollar. And the authorities will do everything to defend that level.


Though when the US dollar index convincingly breaches the 99 level, with potentially geopolitical triggers, we most likely will see 92-94 before falling to 70 if and when “justified” by fundamentals and sentiment. When we break crucial levels things will start feeding on themselves.


The inverse correlation a result of the gold and silver price being expressed in US dollar is showing a very near break-out (see below). And as charts show the further in time we get the more certain the break-out will be. It is just a matter of time. AISC or All In Sustaining Cash costs for gold are between $1,100 and $1,300. In other words the downside is very limited because below these levels there are not many gold producers that will be profitable.


A war the Fed, BIS and bullion banks are finally losing

As mentioned here above there is clearly a tug of war going on in the futures market. There are record short positions in the gold and silver markets and especially in silver with the longs not getting flushed out. The number of strong hands, investors that believe in the long-term prospects for gold and silver and are holding on to their positions, are clearly increasing. The Fed and the bullion banks dumped 22,000 futures contracts on Tuesday April 18 just before the London fix, which resulted in a $8, fall of the gold price in order to rise subsequently $15!!! In my point of view this is a clear sign of the increasing demand for gold from investors to hedge themselves against the geopolitical risks, peak markets and an imminent weakening of the US dollar whilst the Fed and bullion banks seemingly are losing their control in depressing the gold and silver prices. This dumping was respectively repeated on April 19 when 20,000 futures contracts were sold. Both dumps had a notional value of between $2.5-$3bn (20,000 x 100 x 1290= $2.58trn).

Conclusion: gold and silver are the lenders of last resort

Next to the geopolitical tense situation in North Korea and Syria we have French elections on April 23. On April 25 the anniversary of the Korean People’s Army is celebrated with possibly new provocations whilst on April 28 we have the deadline for the US government to pass a new funding bill. Congress is on holiday till April 25 and it’s unlikely they will do anything other than pass an “extraordinary funding measures” bill to allow the debt ceiling can to (yet again) be kicked down the road. Anyway a lot of events that could possibly lead to spikes in the equity and bond markets and the US dollar and gold and silver. And then last but not least of course the Fed meeting on May 2-3 which I will follow with great interest.

As described in my last article the mother of all counter-party risks in the end is the devaluation of your currency, the purchasing power or the real goods you can buy with your nominal money. And the CBs have issued so much money without the expected productivity gain that now the law of dimishing return is having the opposite affect and is undermining the value of the reserve currency. You just have to look at what happened in Japan since 1989. And as we know in 2008 the banks created the crisis now the central banks are creating the crisis by undermining the currencies .

Central banks (ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record.” As Hartnett of BoA notes, the “Liquidity Supernova is the best explanation why global stocks & bonds both annualizing double-digit gains YTD despite Trump, Le Pen, China, macro…”









According to the chart here below any time the central bank punch bowl is taken away, an unpleasant “financial event” inevitably happens.


We are at the end of a long economic cycle. And the central banks haven’t been able to “help us out” we are on our own and therefore preserve your capital by acquiring physical gold and silver, the ultimate lenders of last resort. You can’t trust the Fed. The Fed will have to admit defeat and reverse policy and it won’t miss its impact on the markets and more importantly the dollar and gold and silver.

© Gijsbert Groenewegen April 21, 2017

Posted at 12:52 PM (CST) by & filed under Jim's Mailbox.

Jim Sinclair’s Commentary

Do you still think my article on the airborne laser cannon to be the ravings of a mad man? I am absolute as correct, as I was on items written about years in advance of this event, like the South China Sea and too many others to list. I am still hurt. Just google the airborne laser cannon aircraft tail number 0-00001. It works but worked too well. They have fixed that. No ICBM missed will ever enter USA airspace, however anything in its way is also coming down.

North Korea Threatens US With “Super-Mighty Preemptive Strike”
April 20, 2017

Whether China is right about North Korea conducting a nuclear test on April 25 remains to be seen, but for now Kim Jong-Un is content with merely escalating the verbal warfare and overnight North Korean state media warned the United States of a “super-mighty preemptive strike” following the latest round of comments by Rex Tillerson who said the United States was looking at ways to bring pressure to bear on North Korea over its nuclear programme.

The Rodong Sinmun, the official newspaper of the North’s ruling Workers’ Party, did not mince its words: “In the case of our super-mighty preemptive strike being launched, it will completely and immediately wipe out not only U.S. imperialists’ invasion forces in South Korea and its surrounding areas but the U.S. mainland and reduce them to ashes” it said according to Reuters.

The threat will hardly come as a surprise: the reclusive communist nation regularly threatens to destroy Japan, South Korea and the United States “and has shown no let-up in its belligerence after a failed missile test on Sunday, a day after putting on a huge display of missiles at a parade in Pyongyang.”


You see more than any man I know of.




Go easy on blind people. I am legally blind. I have been along with Bill preaching this for years before it was even considered a factor in gold.




It’s not really the amount that matters (although the purchases ARE significant).

It’s the direction Russia is taking. Namely non-stop accumulation.

With China, Russia, and India (arguably the 3 most populous nations today) accumulating vast amounts of gold, the price will have nowhere to go but significantly higher. Now Turkey is gaining momentum in the gold accumulation game.


Even a blind man can see what’s coming. there’s no excuses for getting caught short precious metals. Simply your own ignorance.

CIGA Wolfgang Rech

Russia adds 25 mt of gold to official reserves in March
20 Apr 2017

Russia added around 800,000 oz (25 mt) of gold to its official reserves in March, data released by the country’s central bank indicated Thursday.

The figure is up from 300,000 oz (9 mt) reported in February, but below 1 million oz (31 mt) for January.

Russia’s central bank reports gold reserves initially in monetary value before releasing the volume on the International Monetary Fund website at a later date, but additions can be calculated using the month-end London Bullion Market Association gold price.


A job if you can find it!




The culture of America today: “You’re Fired” and here’s $25 million as punishment.

Do it again and the punishment will be a $50 million!

CIGA Wolfgang Rech

Bill O’Reilly Gets $25 Million From Fox News As Final Payout
April 20, 2017

With Bill O’Reilly officially ousted by Fox News, there was speculation whether the former Fox anchorman would receive a lump sump payout as a parting settlement considering that O’Reilly signed a new 4 year contract just before being ousted. It has now been confirmed by FT and CNN that indeed, O’Reilly will get a payout of $25 million, equivalent to one year’s salary, as part of his exit settlement with 21st Century Fox.

“The amended contract provides for Bill to receive a maximum of one year’s salary,” said a person with knowledge of the terms quoted by the FT.

O’Reilly’s payout, following the presenter’s dismissal from Fox News this week after a 22-year career with the network, is less than the $40m Roger Ailes, the network’s former chairman, received when he was fired in similar circumstances last year.


Posted at 11:03 AM (CST) by & filed under In The News.

Bill Holter’s Commentary

This makes it two days in a row, 4 weeks worth of global gold production sold in less than 10 trading minutes. “Who” would sell gold like this …unless it’s not really gold?

Gold Slammed For Second Day As ‘Someone’ Panic Dumps $3 Billion Notional Ahead Of London Fix
April 19, 2017


Today, having failed to keep the precious metal down (25,000 contracts dumped in a minute), they went for it again with a $3 billion notional pummeling in futures…



Posted at 1:10 PM (CST) by & filed under General Editorial.

It certainly applies to today’s gold market and Bill’s commentary titled “Gold Market Fluctuations Today”.

As you know, I spent my early years in finance as a market maker (specialist) for an average of 35 different companies successfully. Things tend to go to your head as a kid until you get this strange idea that you could never make an error.

Blyth & Co in 1958 had a head trader renowned for his talent. I felt I witnessed some market weakness entering a situation I was a market maker in at that time. I flipped the key on our direct phone wire to Blyth & Co asking for his market on this company. He replied 12 bid 12 1/2 offered (12 to 12 1/2). Being a cocky kid, I offered what was then a considerable block of shares at $12. He bought them all to my surprise. Blyth then asked me if I had any more to sell? I said maybe, but I would be back to him. I knew I was in trouble so I flipped my direct line to Marty McNeill at Vilas and Hickey using him to check Blyth’s market on this item. Marty came back to me with the bad news 12 1/8 to 12 5/8. That was more electric shock that my short was in trouble. Marty did not make this market therefore was not competition to Blyth as I was. I told Marty to cover my short act the market plus 1/8 to him and and take a long position of the same size for me as an agent. Of course by the end of the day it was 14 bid.

Today in gold there was a multi-billion paper sale of gold on the Comex which took gold down only to reverse up and now exceed more than $6 from the low caused by the paper sale of billions in gold in seconds.

This is, in my opinion, a repeat of Blyth’s life lesson to me of trading. Someone bought that multi million offering of paper gold and then continued to buy pushing the price up above the sale prices.

I do not care if there seller was the Fed or King Midas himself. Gold is headed up the magnets to a new high and then higher with of course great drama as only gold can provide.



Posted at 11:02 AM (CST) by & filed under Jim's Mailbox.

Correct Wolfgang, not “only” an idiot would do this. These raids are performed by those trying to keep “cover” of the fiat system. It is actually pretty smart (not in the long run) to attack the number one arch enemy of the dollar…and who might have motive?





Anybody with even the slightest inkling of price understands the relationship of the Dollar to Gold.

When the Dollar drops hard, gold goes higher….hard!

It’s simple….gold is priced in Dollars and hence a cheaper Dollar means you must pay more Dollars per ounce.

We all know this.

This morning the Dollar dropped hard…well below 100 on the DXY.

Yet, someone decided to dump 22,000 contracts in the face of a collapsing Dollar. That’s $3, billion notional value!

Only and idiot would not go/stay long gold in the face of a dropping Dollar.

And if this idiot really wanted to get out of gold, he would have sold slowly to get the best price for gold.

Since traders, especially commodity traders, are not idiots…it could only be the Fed.

CIGA Wolfgang Rech

Despite Dollar Dump, Gold Just Got Slammed By $3 Billion Notional Sale
April 18, 2017

While the dollar index tumbles to its lowest level since days after the election…


Someone decided this morning was an opportune time to dump over 22,000 gold futures contracts (almost $3 billion notional) sparking a quick plunge in the precious metal…


Posted at 9:55 AM (CST) by & filed under Bill Holter.

I started my summer hours this week and rode early to beat the heat of the day. When I left at 7:00 am gold was up $1.20. When I returned I saw silver down .28 cents and gold off $4 so I figured some sort of shenanigans. The dollar was weak when I left and weaker upon return so it had nothing to do with the dollar. Then I read this…$3billion worth of gold sold …again for perspective, this is nearly 4% of global production or almost two weeks worth. And again, who would sell like this if they wanted the best price for their gold?

Fast forward 30 minutes and gold is now positive for the day. Over the last few weeks we have seen weakness early in gold and strength toward the close. This is a big change. A much BIGGER change will be if gold can hold positive for the day and maybe even close stronger. This would be if my memory serves correctly, the first time a massive amount of paper raided the market which then closed the day positive. Also keep in mind how many “new” contracts (fake supply) it has taken to keep gold’s rise in check.

As Jim and I have said, we are at major inflection points in many (all) markets, a strong gold close today followed by a breakout from here would be a very bad signal for paper markets. An out of control gold market will spell doom for paper markets and lead to the plug being pulled! Monitor this closely!

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Posted at 2:10 PM (CST) by & filed under Jim's Mailbox.

Courtesy of CIGA Gijsbert. Kim Il-Trump! (Posted for it’s comedic value.)


Dear Wolfgang,

You are the most optimistic of those that really get it. What future?




We’re looking at the future, and at the risk of appearing “archaic” in my thinking, the outlook is bleak!

Retail will become an anachronism. As will the workforce.

In German, there’s a word for the likes of Amazon…..” Allesfresser” (one who eats and devours everything).

CIGA Wolfgang Rech

Amazon: Engulfing Everything
April 17, 2017

Just Saying…

Looking for the trade based on some Amazon Ruminations. All because I saw this.

Behold the Amazon Angie List Killer.

Amazon observations last night:


Sears reinvented for century 21? Catalogue business in reverse?