Posted at 12:19 AM (CST) by & filed under Jim's Mailbox.


This is what Merrill sent us today.

Respectfully yours,
Monty Guild

David Rosenberg over the ML Squawk box this AM

Why we think gold and commodities too are a no brainer: The protectionist trend is fully intact — see the front page of the WSJ ("Nations Rush To Establish New Barriers To Trade"): The WTO is gathering on Monday to discuss stemming the "wave of barriers to world commerce".  Russia has raised trade barriers to such an extent that EU officials are headed to Moscow to meet the country’s trade officials. Egypt just raised duties on sugar.  The USA is planning retaliatory action against Italian water and French cheese — and levying new tariffs on Chinese-made goods too. This may not exactly be Smoot-Hawley, but this is starting to look more like the 1930s than many are willing to admit. Also have a look at "Free-Traders Conspicuously Quiet on Buy American" on page 2 of the FT.

Dear Jim,

What do you think of the equity market here?

CIGA Green Hornet

Dear Green Hornet,

Short and sweet.

If the uptick rule is reinstated as Cox (ex SEC caretaker) advised going out the door of the SEC offices then a 1930 rally has a 70% chance of occurring. I think it would.

If the lobby of the hedgies is rich enough then the uptick rule will not be reinstated and the equity market rally will be short and lacking of any noteworthy character.

It is business as usual as the Big Money game of Hedgie Lobbyists own versions of pork.

The Hedgies are the short side of all markets.

See you in Toronto.

All the best,

Posted at 5:43 PM (CST) by & filed under In The News.

Dear Friends,

1. The position of Volcker as Chairman of the Economic Advisory Board is a window dressing presently to placate conservatives.
2. Chairman Volcker is there, but on his own agenda, no one else’s.
3. Chairman Volcker, assuming he is blessed with eight more years of life, will once again perform as Master of the Financial Universe, saving whatever then is left of the USD.
4. All you need to do is review Chairman Volcker’s previous and present words to understand that agenda.
5. Yesterday, Chairman Volcker said it would cost trillions more, not billions, to paste together the tattered economy.
6. Chairman Volcker historically has defined the economic condition we are in as the Mother of Financial Crises. MOTHER OF ALL.
7. Chairman Volcker historically has said that the US dollar will decline as long as no policies are put in place with the proven capacity to change deficits towards surpluses.
8. Chairman Volcker had the total backing of the then sitting Administration when he bankrupted the USSR in the early 1980s.
9. Chairman Volcker will act when conditions get so terrible that the sitting Administration applies to him for his help. There will be a price for that help.
10. The Federal Reserve Gold Certificate Ratio, modernized and revitalized, will be adopted as I have outlined to you multiple times.
11. The Chairman will require that policies be put in place that have historical precedent to cause deficits to move towards surpluses, untenable now.
12. That mark to the low is a pummelled dollar below .5100 USDX.
13. This will mark the time for long term investment in companies leading the technology and biomedical fields of that time.
14. As a result of the "FRGCR" the price of gold will go up and remain up. This will effectively defeat 99.9% of the present gold writer’s outlooks for the metal.
15. I believe the most successful owners of gold will be the Carlyle corporation.
16. I believe the consolidator of the gold industry, assuming they rise to Russian and Chinese competition, will be Barrick. This has also been outlined to you multiple times.

Respectfully yours,

Obama names outside economic advisory panel

Published: Friday February 6, 2009

President Barack Obama on Friday charged a new Economic Recovery Advisory Board to provide him with independent advice on pulling the United States out of recession.

The president signed an executive order formally creating the board which will hold regular briefings for Obama and Vice President Joe Biden and will be under the chairmanship of former Federal Reserve chief Paul Volcker.

The board will be modelled on the Foreign Intelligence Advisory Board that offers the president an independent viewpoint on intelligence issues, the White House said.

Volcker, 81, played a prominent role during Obama’s election campaign, providing him with economic advice and gravitas as the US meltdown developed.

The announcement came on a day when new government data showed unemployment surging to 7.6 percent — the highest since 1992, as 598,000 jobs were cut.

Among other business figures on the new board were Obama supporter Penny Pritzker, chairman of the Pritzker Realty Group and former Obama campaign finance chair, Charles Phillips, President of the Oracle Corporation and Laura D’Andrea Tyson, a former Clinton administration economic official.



Jim Sinclair’s Commentary

Every bank has its own Patsy.

You know those trillion dollar deals don’t really stand out too well. Quadrillion dollar deals must be totally invisible.

Ever heard the words Compliance, Ethics and Oversight?

More major BS in a spin it all world.

Deutsche Bank Fallen Trader Left Behind $1.8 Billion Hole

The fall of Boaz Weinstein, once one of Wall Street’s hottest traders, speaks volumes about why financial firms still are reeling from the shattered global markets.

As a chess master, poker and blackjack devotee and top trader at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8 billion in losses, erasing more than two years of trading gains.

On Thursday, the German banking giant reported a 2008 loss of $5 billion (€3.9 billion), its first one-year loss in over five decades and a reminder that financial firms are not out of the woods. In an earnings conference call, Chairman Josef Ackermann described the market environment as a "series of earthquakes with constantly changing epicenters."

The losses are the latest reminder of the challenges faced in the new financial order. Wall Street firms long relied for much of their profit on massive risk-taking by aggressive traders deploying the firms’ own money; with that game over, firms are struggling to find fresh sources of revenue.

But first they must stabilize their institutions after the holes dug by former Masters of the Universe. Last month, Deutsche Bank shut down Mr. Weinstein’s operation and wound down many of his positions. He left the bank this week, with plans to start a hedge fund.



Jim Sinclair’s Commentary

Today in Pakistan.

India: Official Accuses Pakistan in Mumbai Attacks
Published: February 6, 2009

India has for the first time directly accused Pakistan’s Inter-Services Intelligence spy agency of links to the planners of the terrorist attacks in Mumbai in November. “The perpetrators planned, trained and launched their attacks from Pakistan, and the organizers were and remain clients and creations of the ISI,” Shivshankar Menon, India’s foreign minister, said in a speech in Paris. Mr. Menon accused Pakistan of “prevarication” in investigating the attacks, which killed more than 160 people. The speech, delivered Wednesday, was released to the news media on Thursday. Pakistan said Indian officials should avoid making such statements at a time when Islamabad was in the process of investigating the matter.


Pakistan nuclear scientist ‘free’

A court in Pakistan has freed disgraced nuclear scientist Abdul Qadeer Khan from house arrest.

Dr Khan, who has been under tight restrictions since 2004, can now leave home and receive visitors.

Dr Khan welcomed the ruling and said he was not bothered what the international community thought of his release.

Dr Khan admitted transferring nuclear secrets to other countries in 2004 but was later pardoned by former Pakistani President Pervez Musharraf.

The US has repeatedly said it wants to question Dr Khan but Pakistan has always refused access.


Reflecting upon Pakistan and Its Nuclear Weapons
February 6, 2009 – 12:00am
By Luis de Lencquesaing

The centrality of Pakistan was first revealed to me two summers ago. I was visiting Cornell friends in Islamabad and Lahore. During a dinner conversation I had with the Turkish ambassador — a diplomat who impressed me by his particularly refined vision of the global dynamics — the topic of Pakistan’s role in the world came up. The ambassador emphasized the strategic role of Pakistan, which sits at the juncture of the broader Middle-East and South Asia.

Is Pakistan not parted in two by the Indus River, on the banks of which Alexander the Great died, and which academics often define as the border between these two universes? This duality is not only geographic, but also cultural. Whether walking down the streets of Lahore, or crossing through villages in the Kashmiri mountains, I was struck by the contrast between the joyful women in their blue or pink Punjabi Shalwar Kamiz with a veil negligently passed over their heads, and the women in black Burkas, with only their mysterious eyes visible. The relaxed Islam of South Asia coexists with Saudi Wahhabism. Pakistan belongs to both worlds. Although Vice President Biden probably was not thinking about the Pakistani women when he visited the country a few weeks ago — I guess you have to be French and 20 for that — he certainly was signaling that in the crucial regions of the Middle East and South Asia, Pakistan is the key actor. For that reason alone, it is the center of the world.

Dryden Road. Jan. 28, 2009. 7:30 a.m. I peek out the window from under my covers, see a snow storm, and wonder why I am not studying in California.

I get to the Statler for a working breakfast organized by the Cornell International Affairs Review on nuclear weapons in Pakistan. Gaurav Kampani, a graduate student in the government department who works on the politics of nuclear proliferation gave us a pessimistic presentation. In the midst of such a “wave of hope,” this talk reminded us that President Obama’s magic may not be enough to solve all the problems of the world between now and Slope Day.



Jim Sinclair’s Commentary

Hedge funds at the dock.

Market Rap – Bernard Madoff, the Mafia, and the Friends of Michael …
In 2005, Patrick Byrne, the CEO of (OSTK) and future Deep Capture investigative reporter, began a public crusade against illegal naked short selling (hedge funds and brokers creating phantom stock to manipulate stock … It is a common misperception that Boesky’s testimony led to the 98-count indictment of Michael Milken. Considering the scope of business the two criminals did together, Boesky actually provided very little information to the government. …
Recent Articles –

Judge Orders Accused NY Lawyer Freed on Bail – Funds and ETFs * US…
A U.S. grand jury indicted Dreier on Jan. 30, accusing him of securities fraud, conspiracy and wire fraud for lying to hedge funds and investment funds that he was selling notes on behalf of a New York developer and a pension fund in …
CNBC Top News and Analysis –

New York investment fraud lawyer Marc Dreier bailed out! | Press …
By heather 
As reported by Reuters, Dreier, a high profile New York attorney for 30 years, wasindicted by a US federal grand jury for securities fraud, conspiracy, wire fraud, misrepresenting hedge funds and investment funds in New York and … | Legal… –

[Updates] Riveting Testimony by a Great American, Harry Markopolos …
By Larry Doyle 
When Mr. Markopolos remarks that FINRA is in bed with the industry, is he referencing that they are invested in hedge funds, fund of funds, and private equity? Our new SEC chair, former FINRA chair Mary Schapiro, ….. Many of these people shouldn’t be appointed, they should be indicted. I guess honest and decent people like Harry Markopoulos don’t have a place in today’s governments. Obama promised change, but he has filled his administration with corrupt and incompetent …

The Divagator: Considerations of Huntington
By The Divagator 
2008 Was Lean Year for New Hedge Funds – Raising money to start any new venture was tough last year, but especially so if you were a hedge fund. Assets for new hedge-fund launches declined 35 perc… 23 minutes ago. Volokh Conspiracy …Germans Probe Report Of Nazi Doctor’s Death – German TV network says concentration-camp doctor Aribert Heim died in Cairo in 1992. He was indicted in Germany in absentia in 1979 on hundreds of counts o… 2 hours ago …
The Divagator –


Jim Sinclair’s Commentary

Pension funds are broke and those anticipating retirement are going to get a royal screwing. This is another problem akin the 1950’s Japanese SciFi wherein the unstoppable green blob ate the earth. Recognition that practically all major retirement fund are broke is the one that fires social unrest and hyper inflation. The green blob is the present economic rescue plan and the seven to follow.

Ford May Add $4 Billion to Pensions, Spurring Aid Bid (Update2)
By Keith Naughton

Feb. 6 (Bloomberg) — Ford Motor Co. may have to contribute $4 billion to its pension plan after a 2008 shortfall, a cash drain that risks dragging the second-largest U.S. automaker closer to a federal bailout.

The collapsing stock market left the fund with a $4.1 billion deficit for its projected obligations, after 2007’s $3 billion surplus, Ford said in its fourth-quarter financial results. That may force an infusion of money starting next year, according to the viability plan filed with Congress in December.

Such spending would add to the strain on the only Detroit automaker not relying on government aid. With U.S. auto sales at their lowest since the early 1980s, Ford said Jan. 29 it lost a record $14.6 billion last year and tapped its entire $10.1 billion credit line while the money was still available.

“The pension is another demand on cash at a time when Ford cannot really afford it,” said Pete Hastings, a fixed-income analyst with Morgan Keegan Inc. in Memphis, Tennessee.

Ford is working to pare costs through steps such as closing plants and is trying to raise money by selling its Volvo unit. The Dearborn, Michigan-based automaker is in early talks with China’s Geely Automobile Holdings Ltd., people familiar with the matter have said.


Jim Sinclair’s Commentary

8th in 2009 and counting.

California’s Alliance Bank marks eighth failure of the year
By John Letzing
Last update: 7:42 p.m. EST Feb. 6, 2009

SAN FRANCISCO (MarketWatch) — Culver City, Calif.-based Alliance Bank was closed by regulators Friday, marking the eighth bank failure of the year amid the ongoing credit crisis, the Federal Deposit Insurance Corporation said. San Diego-based California Bank & Trust has agreed to assume the failed bank’s deposits, the FDIC said. Alliance Bank had $1.14 billion in assets and $951 million in total deposits as of Dec. 31, the FDIC said.



Jim Sinclair’s Commentary

This is not capable of correcting the economic malaise as it does not even address the real problem.

It is quite capable of initiating the inflationary potential of monetary stimulation without any historical precedent.

The adventure begins now, which will culminate in an inflation of such dimension that it also lacks historical precedent.

Reinstate the uptick rule guys if you want a hand from an equity rally of some duration.

Senators Reach Accord on Stimulus Plan as Jobs Vanish

Published: February 6, 2009

WASHINGTON — Spurred by a dismal unemployment report for January and prodded by President Obama, senators reached an accord on Friday evening on an economic stimulus program of some $780 billion.

Democrats succeeded, after a long day of private negotiations and intense public debate, in winning the support of enough Republicans to move the package toward a final Senate vote, where Democrats are confident of passage, given the support announced by several Republicans. Exact outlines of the accord, which is somewhat smaller than the amount originally sought by President Obama, were not immediately available, but the senators agreed to cut some spending and strip out some business tax cuts to gain enough Republican support.

Senator Harry Reid of Nevada, the Democratic majority leader, hailed the agreement. “This is a very critical juncture for our great country,” he said on the Senate floor.

The timing of the Senate vote was not clear, but Mr. Reid signaled that action could take place over the weekend. Once it the package is approved, differences between the Senate legislation and a considerably different version passed recently by the House will have to be reconciled. President Obama has said he hopes all that can be accomplished in time for him to sign the measure within 10 days.

Three centrist Republicans, Arlen Specter of Pennsylvania and Olympia J. Snowe and Susan Collins, both of Maine, were among the senators wooed by Democrats, whose efforts were bolstered by Rahm Emanuel, the president’s chief of staff, who is a former Congressman from Illinois.


Posted at 3:19 PM (CST) by & filed under General Editorial.

Dear CIGAs,

The following is making the rounds on the internet. Enjoy.

Sometime this year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers..

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. No, they are borrowing it from China.  Your children are expected to repay the Chinese.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn’t that stimulating the economy of China?
A. Shut up."

Posted at 11:05 PM (CST) by & filed under In The News.

Dear Friends,

A society that promotes lies (make believe computer based asset valuation by fiduciaries) as truth (real value) for the profit of the few is NOT a society, but rather a group of animals destined for their own immediate destruction.

Most unfortunately these Wall Street Fat Cat few destroy the many common men in their manic pursuit of personal wealth and egocentric power.

A move like this certainly puts the second coming of our new leadership in question. It screams that the new administration is simply business as usual – fraud.

Millions of attendees at the inauguration prayed otherwise. What a sham if this rumor has any basis.

What a slap in the face for those millions attending the recent inauguration.

Accounting rule change hopes spur Wall St. rally (Reuters)

NEW YORK (Reuters) – Stocks rallied on Thursday on investor hopes that the government’s plan to shore up the financial system will include a change in accounting rules that would stem bank write-downs and spur lending.

Bank stocks reversed losses in late morning to lift the Dow off its lowest level since the bear market low of November 21.

Bank of America (BAC.N) finished up 3 percent, while JPMorgan (JPM.N) rose 2.1 percent and the S&P financial index (.GSPF) rose 1.4 percent. A solid January sales report from Wal-Mart (WMT.N), coupled with better-than-expected reports from a few other retailers added to the positive tone.

"Anything that helps the banks is helpful for the economy if they can start lending," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois. "Wal-Mart news was good, so that also helped."

The Dow Jones industrial average (.DJI) rose 106.41 points, or 1.34 percent, to 8,063.07. The Standard & Poor’s 500 Index (.SPX) gained 13.62 points, or 1.64 percent, to 845.85. The Nasdaq Composite Index (.IXIC) climbed 31.19 points, or 2.06 percent, to 1,546.24.

The S&P 500 is now off 6.4 percent since the start of 2009, but has risen 12.4 percent since the bear market low hit in November.


Jim Sinclair’s Commentary

Oh my god, where is the rage?

Bush SEC Holdovers Cite Executive Privilege, Refuse to Answer Questions at Madoff Hearing
By Susie Madrak Thursday Feb 05, 2009 3:01pm

David Sirota on yesterday’s hearing about Bernie Madoff:

At a contentious Financial Services Committee hearing today about the failure of the Securities and Exchange Commission to prevent the Bernie Madoff scandal, the SEC’s General Counsel cited executive privilege as reason that he and the SEC’s enforcement branch were refusing to answer congressional inquiries. You can watch the video here – the executive privilege issue comes at about 5 minutes and 15 seconds into the clip.

As you’ll see, SEC officials refuse to answer the committee’s basic questions about the Madoff scandal, and the agency’s acting general counsel, Andy Vollmer (a Bush holdover and maxed-out donor to John McCain’s presidential campaign) explicitly cites executive privilege as his legal rationale for refusing to provide basic information to federal lawmakers.

Congress has a constitutional obligation to engage in basic fact finding, both in order to legislate reforms at the SEC and to publicly expose how our economy was destroyed by sharks like Madoff. Now, Bush holdovers at the SEC are using executive powers – powers that are now President Obama’s – to prevent Democratic lawmakers from doing their job.


Jim Sinclair’s Commentary

Today in Pakistan. Another challenge for President Obama.

Seven dead in Pakistan blast: hospital

MULTAN, Pakistan (AFP) — A bomb exploded near a Shiite mosque in the town of Dera Ghazi Khan in central Pakistan on Thursday, killing at least seven people, a hospital doctor said.

Police said the bomb was planted outside the mosque and exploded shortly before a religious gathering got under way.

"I have seen seven bodies," Doctor Pervez Haider, the head of the local hospital, told AFP by telephone.

"We have shifted 25 people to the local hospital, eight of them were in critical condition," local police chief Maqsoodul Hassan said.

The blast shattered windows in nearby buildings, local residents said.

The location of the explosion — close to a Shiite mosque — raised fears that the bombing could be the latest episode in a wave of sectarian violence to rock Pakistan, an overwhelmingly majority Sunni Muslim country.


Indian Official Links Pakistan’s Spy Agency to Mumbai Attacks
By VOA News
05 February 2009

India’s foreign secretary says Pakistan’s spy agency is linked to planners of the Mumbai terrorist attacks that killed more than 170 people in November.

Shivshankar Menon says the organizers planned, trained and launched the attacks from Pakistan, and that they were and remain clients of the Inter-Services Intelligence, Pakistan’s spy agency.

Indian leaders have repeatedly said that Pakistan’s intelligence agencies have had some role in the Mumbai attacks.

Recently, Indian Prime Minister Manmohan Singh said the terrorists who carried out the Mumbai attacks "must have had the support of some official agencies in Pakistan."

Pakistan’s government rejected Mr. Singh’s remarks as little more than a "propaganda offensive."


Jim Sinclair’s Commentary

Did you suspect anything different?

Regulator Says Bailout Fund Overpaid Banks
February 6, 2009

Add this to the list of complaints about the government’s Wall Street bailout: When Washington was buying pieces of banks last year, it may have overpaid, by as much as 30 percent.

A regulator overseeing the government’s $700 billion bailout testified Thursday that the Treasury Department paid $254 billion for $176 billion of assets — a shortfall of $76 billion.

“Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value,” said Elizabeth Warren, chairwoman of the Congressional Oversight Panel examining the Troubled Asset Relief Program, or TARP. She cited a valuation study as evidence of the overpayment.

The figures were calculated by studying 10 transactions and then extrapolating their results to all of the TARP purchases in 2008, Ms. Warren said.

“There may be good policy reasons for overpaying,” Ms. Warren said. “But without a clearly delineated reason, we can’t know.”


Jim Sinclair’s Commentary

Food for thought – is your local bank safe? Probably not.

Banks Sitting On An Inventory Time Bomb
Posted By: Diana Olick
Wednesday, 28 Jan 2009

An interesting little factoid from RealtyTrac, the online foreclosure sale site that tracks all kinds of foreclosure data.

Apparently about 70 percent of foreclosures in its database have not yet been listed on the MLS. I’m wondering why? Why are the banks sitting on all these properties instead of listing them for sale?

Okay, a couple of posibilities:

* The inventory of foreclosed properties has just exploded so rapidly and in such high volumes that the banks can’t process it all as fast as they would like to.

* In a lot of cases it’s taking longer to process the foreclosures themselves and the homes are getting trashed. Before the bank puts the house up for sale it has to do all the repair work, and now more repair work is needed.

Now here’s a possibility that is a bit more disturbing. Rick Sharga of RealtyTrac says he can’t get anyone to confirm it but he can’t get anyone to deny it either:

"The lenders are simply trying to defer the losses to a later date, because having to recognize the losses short term might pose severe risks to the banks in question."



CIGA Christopher’s Commentary

It seems the honeymoon between Volcker and Summer is over.

That was predictable.

Volcker Chafes at Obama Panel Delay, Strains With Summers Rise
By Robert Schmidt and Julianna Goldman

Feb. 5 (Bloomberg) — Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said.

Volcker, 81, blames Obama’s National Economic Council Director Lawrence Summers for slowing down the effort to organize the panel of outside advisers, the people said. Summers isn’t regularly inviting Volcker to White House meetings and hasn’t shown interest in collaborating on policy or sharing potential solutions to the economic crisis, they said.

While Summers, a former Treasury secretary, oversees the official White House economic policy apparatus, Obama tapped Volcker for a new Economic Recovery Advisory Board charged with injecting fresh, outside ideas into policy debates.

“When you have two strong, highly accomplished, driven people, it’s not unusual that there is going to be a battle over turf,” said James Cox, a professor at Duke University Law School in Durham, North Carolina. “I would hope that Obama doesn’t lose Volcker’s counsel. They need someone to help them think outside the box.”

The contretemps shows the difficulties Volcker, perhaps the world’s most respected economist, may encounter as an outside adviser charged with providing policy alternatives to the president, said William Silber, a finance professor at New York University’s business school.


Posted at 8:41 PM (CST) by & filed under General Editorial.

Dear CIGAs,

While power remains a serious problem in the Republic of South Africa, Tanzania is expanding the delivery of power to the areas of the Tanzanian Greenstone Gold Belt and the Kabanga/Kagera Nickel Belt.

Attention to infrastructural needs of the extractive industries is the best of "open for business" signs.

DJ Tanzania Tanasco To Build 400-KV Pwr Line To Mining Region-Co
Last update: 10:24 a.m. EST Feb. 4, 2009

Feb 04, 2009 (Dow Jones Commodities News via Comtex) — DOW JONES NEWSWIRES

Tanzania’s state power utility, Tanzania Electric Supply Co., or Tanesco, is planning to build a 400-kilovolt power line to the country’s northwestern gold mining regions in a bid to guarantee reliable power supplies to the country’s gold mines, Tanesco said Wednesday.

In a statement, the utility said the new power line is expected to serve the northwestern mining centers of Buzwagi, Kabanga and Tuliwaka.

"The new backbone transmission line will improve power line capabilities for smooth power transfers and reduce technical system losses," said Idriss Rashid, Tanesco’s managing director.

Currently, most gold mines in Tanzania rely on thermal plants to run operations and providing the power line would minimize carbon dioxide emissions and shield gold mines from volatile global fuel prices, Rashid said.

Barrick Gold Corp. (ABX) is planning to start gold output at Buzwagi Gold Mine in the second quarter of this year. Other mines that are expected to benefit from the new power line include Barrick’s Tuliwaka Gold Mine and North Mara Gold Mine as well as the Kabanga Nickel project.

Tanasco says Tanzania’s current power distribution and generation facilities have been constrained by inadequate investments, vandalism as well as increased power demand. The power utility is expected to produce an additional 200 megawatts of power from gas plants by 2010 to meet rising power demand.


Posted at 3:50 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Gold priced in terms of Euros once again set a new all-time record high at the London PM Fix at €719.199. Clearly, European-based gold buying is very, very strong right now.

The commodity currencies, the Canadian, Australian, and New Zealand Dollar, were all higher in today’s session as were many commodities notably the grains, unleaded gasoline and natural gas. Palladium kicked back above the $200 level while platinum remains a bit below the $1000 level trading near $990.

Around mid-session, news hit the wire that the feds were considering suspending or modifying the mark-to-market accounting rules which had forced banks to value the stuff on their books at market prices instead of their computer model prices. Wall Street loved it and immediately began buying up shares of the financials which firmed the entire equities markets and put a bid back into many commodities. Interestingly enough, both copper and lumber went down – not exactly an encouraging sign for those looking for signs of a bottom in housing.

Gold began moving off its highs on the news as the safe haven bid for the metal then began to dry up. The idea is that if the banks can fudge the numbers on their books then they can present much improved balance sheets to observers and thus restore confidence to the market which in turn will supposedly lead to a loosening of credit and improved lending activity. I am not saying I agree with this but just remarking about how it is being viewed. All I know is that I sure wish it was that easy for me to improve my financial picture by arbitrarily assigning a value to my assets. “What are you worth Trader Dan?” “I don’t know – what do you want me to be worth and I will make it so”.

I am not sure where this is going to go but for today at least, it is the talk of the town.

The technical result of all this as concerns gold was that after it had charged all the way back to strong resistance at that stubborn $920 line, the potential accounting change news emboldened the shorts and spooked the longs and down and back away from that level it receded once again. Ditto for the shares as indicated by the HUI and the XAU which fell back from the top of their trading range once again. The move further away from support down near $890 is constructive but gold has still been unable to get a strong move through $930, which is what it will take to set up the next leg higher. For now it remains in a consolidating pattern with an upward bias.

Gold is trading firmly above all of the major moving averages with the 10 day proving to be good support. All of those moving averages are trending solidly higher. The RSI is still not yet in the overbought zone so there is potential for further upwards action should bulls have the wherewithal to push it higher.

The accounting news also pushed the Dollar back down and moved the Euro back into positive territory as risk was back in once again with the Japanese Yen getting the snot beat out of it. The Yen could collapse quite rapidly if this risk mentality sets back in again. Maybe the jobs number tomorrow which is expected to be quite poor will firm it back up again but since that number is already widely expected to be a stinker, it will probably take an extremely poor reading to undo the mild euphoria surrounding the change in accounting rules. All I know is that there are a helluva lot of spec longs piled into the Yen and it could be quite a bloodbath in there if the sentiment towards it shifts. Those of you who want to trade that thing, should be prepared for extreme volatility. You could get hurt very badly if you are not very, very quick.

Gold deliveries for February were worse than terrible – they were non-existent. In other words, there were ZERO deliveries assigned for today in the February contract. That should make the thieving gold shorts at the Comex quite pleased. Nothing like signaling defeat to your enemy and boosting their morale.

Open interest levels are still remarkably low considering the levels at which gold is trading. We are at 346,000 compared to a peak above 593,000 and gold is $85 away from the $1,000 level.

As a side note, dairy farmers are experiencing a horrendous time right now and many are not expected to see their businesses survive the winter. Milk prices  have plunged below the cost of the production for many of them with reports that some are losing as much as $200/head. That is terrible news and my heart goes out to these hard-working folks who rise early each morning and endure the ins and out of this very difficult industry in which to survive. They have no choice but to begin culling their herds if they hope to weather this horrific storm. A pox on the damn bankers and monetary authorities along with the politicians who created this disaster for the rest of us. Where’s the bailout money for these family owned businesses who are the backbone of this nation? Oh yeah, I forgot – that is reserved for the pond scum who got us into this mess in the first place.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini


Posted at 1:20 AM (CST) by & filed under In The News.

Dear CIGAs,

The following is CIGA Lyn’s volunteer crew practicing for the Hedgie hunt and subsequent feasting.


Because of the gigantic machine that is government, there cannot be a great deal of difference because of one man. President Obama has gathered so many "old School" thinkers about him that there is little, if any, room for imaginative thinkers that could possibly come up with innovative solutions.


Jim Sinclair’s Commentary

Now this is king of the bears. Note Bloomberg’s disavowal at the end of the article.

U.S. Housing Slump Has ‘Just Begun,’ Says Forecaster Talbott

Feb. 5 (Bloomberg) — Let’s say you own a $1 million home in Santa Barbara, California.

The house seemed like a steal when you bought it with that adjustable-rate mortgage in 2005. You still love the white beaches and those yachts bobbing up and down in the harbor.

Then you awaken early one morning, troubled that your monthly payments will soon double. You go out to pick up your newspaper and see for-sale signs on five houses on the street. One identical to yours just sold for $500,000.

Are you going to pay the bank $1 million plus interest for your place? John R. Talbott, a former investment banker for Goldman Sachs, poses that hypothetical question in his latest book of financial prophesy, “Contagion.”

His answer: “I don’t think so,” he says. “If I’m right, then this housing decline has only just begun.”



Jim Sinclair’s Commentary

Recall who called Crude at $100 plus when it was laughed at.

Goldman Sachs lifts gold price forecast to $1,000/oz
Thu Feb 5, 2009 12:55am GMT

SINGAPORE (Reuters) – Investment bank Goldman Sachs raised its forecast for the price of gold to reach $1,000 an ounce in the next three months from its previous forecast of $700 due to rising investor demand for safe haven assets.

"The gold price rally has been driven by surging demand for gold in all forms: physical gold, exchange-traded funds (ETFs), and futures contracts as investors seek ‘a safe store of value’ amid the financial distress and inflation risks," it said in a report.

It also noted that a strong relationship betwween the price of gold in U.S. dollars and the exchange rate of the dollar against other currencies has begun to break down. Gold was trading at $903.15 an ounce by 0038 GMT, down $1.70 from New York’s notional close.


Justin Oliver


Not the Justin Oliver you were looking for?


Jim Sinclair’s Commentary

Seen any hedgies lately?



Dear CIGAs,

The general equity markets are trying to stage a rally. If the SEC would reinstate the uptick rule, maybe a 1930s rally in a bear market could occur. Let’s see if Mrs. Shapiro is a light in a very dark tunnel or if it is business as usual.

Jim Sinclair’s Commentary

Come on you guys out there with the money, get out of paper gold and get into the real fight.

Today Trader Dan said:

"A side note – deliveries in February have so far been disappointing when compared to December 2008. Only a bit more than 200,000 ounces of gold have been stopped compared to 1.17 million after the first 4 delivery days back with the December contract. That is not going to help dislodge the strangle hold that the bullion banks have on the Comex."

Nobody can complain about the Comex guys picking your pocket every day as long as gold is not taken delivery of from the Comex and moved out of their warehouse. The Comex cannot stop gold from going to $1650 and then on to Alf’s number as a product of the choice between public unrest and hyperinflation, a currency event.

All the Comex manipulators can accomplish is a move of the gold price backwards six feet after it has gone forward ten. This will happen on a constant basis until one day it blasts up and out by hundreds of dollars.

Jim Sinclair’s Commentary

The connected can do no PUNISHABLE wrong!

The best investment of a million dollars has not been in any business, stock, or commodity, but in past political donations.

That speaks tomes about where the dollar and all fiat currency is really headed and were gold is finally destined to be.

Madoff Outrage: Whistleblower Testimony Rips SEC
Rich Edson
Tuesday, February 03, 2009

The Madoff whistleblower, Harry Markopolos, has finally and publicly detailed his nearly eight-year investigation into Bernard Madoff — a period in which Markopolos said he feared for his life.

“If Mr. Madoff was already facing life in prison, there was little to no downside for him to remove any such threat,” said Markopolos’ testimony. “We did know, however, that he was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

Markopolos provided detail evidence to the Securities and Exchange Commission from 2000 to 2008 and said there was an abject failure by the regulatory agencies, said his testimony.


Jim Sinclair’s Commentary

The connected can do no PUNISHABLE wrong!

The best investment of a million dollars has not been in any business, stock, or commodity, but in past political donations.

That speaks tomes about where the dollar and all fiat currency is really headed and were gold is finally destined to be.

Madoff Outrage: Whistleblower Testimony Rips SEC
Rich Edson
Tuesday, February 03, 2009

The Madoff whistleblower, Harry Markopolos, has finally and publicly detailed his nearly eight-year investigation into Bernard Madoff — a period in which Markopolos said he feared for his life.

“If Mr. Madoff was already facing life in prison, there was little to no downside for him to remove any such threat,” said Markopolos’ testimony. “We did know, however, that he was one of the most powerful men on Wall Street and in a position to easily end our careers or worse.”

Markopolos provided detail evidence to the Securities and Exchange Commission from 2000 to 2008 and said there was an abject failure by the regulatory agencies, said his testimony.


Jim Sinclair’s Commentary

Regardless of "Safe Haven," and whatever the fancy flavor of the month is, the US dollar will be ruled by the size of the US Federal Deficit, the condition of the US TIC report and US Trade Balance.

Algorithms distort everything. The new to-be TA gang get their pockets picked regularly.

In the end economic law rules. Economic law says that the US dollar will break the neckline of the huge Head and Shoulders being created in the US Trade Weighted Dollar and tank the US dollar all to hell.

This is no different than the flavor of the month that had the US dollar 30 year bond at 147.

There is no other possibility.

Big Deficits and a Weaker Dollar
by Michael S. Rozeff

Hyperinflation in the U.S. hasn’t happened for quite some time. The last two instances that come to mind are confederate money in the 1860s and the continentals in the 1770s. In both these cases, governments used inflation to finance wars because their tax systems were weak.

A strong tax system (from the government’s perspective) has several aspects. It has a large productive capacity that it can tax without causing production to decline by a great deal. It can enforce tax collections. The required taxes are low compared to the overall government spending.

The U.S. tax system is not weak, but it is weakening. The productive capacity is difficult to evaluate, but it too has probably weakened. The U.S. economy has a large government sector (at least 40 percent) that is relatively inefficient. It also interferes with and distorts the private economy. The federal government has not been able to finance its spending by current taxes in a long time. Instead it has resorted to borrowing (deficit spending) and inflation. The results are a large national debt and a depreciating currency.

U.S. government financing has weakened further in the past year. The government is borrowing very heavily to pay for such actions as the absorption of Fannie Mae and Freddie Mac, bailouts of AIG and large banks, and the rest of the Troubled Assets Relief Program. A short while ago, the government sent out $160 billions of dollars of tax rebates. Meanwhile the Fed has, on its own and with government cooperation, vastly increased credits to the private economy. This has dramatically inflated the monetary base.

The prospects for further tax cuts and higher government spending are bright. In particular, the federal and state governments have made large promises in Social Security and Medicare that, if carried out, mean much higher future government expenditures. These cannot be financed by higher taxes, as they would be too high and crimp production. This spells greater deficit spending, which in turn raises the prospect of higher inflation. In fact, the Fed has already begun to buy more securities in the open market. This "monetizes" debt or creates base money that allows banks to increase lending if they so choose.


Jim Sinclair’s Commentary

The choice will come in the form of a political decision to redo the Kent State incident OR hyperinflation, a currency event. Count on hyperinflation, a currency event under the present administration and legislative. What decision do you think Barney will make?

Revolt Spreads Across the Globe as "Crisis" Continues to Unfold
Unrest rocks the streets of China, France, Russia, Mexico, and elsewhere. And it is spreading…
By Nathan Coe, GNN
Published: Wednesday February 4th, 2009

“They say that the fires of revolt will spread everywhere, and we see acts like damage to bank branches or state buildings and claims of solidarity with the Greek rioters.”

After numerous European governments expressed fear that the unrest in Greece would spread to neighboring countries and perhaps around the world, the spreading global revolt has taken on another tone: that of confronting the elite for their manipulation of the economic “crisis” (which is really a systemic collapse) in order to consolidate yet even more wealth as the masses of the world suffer the brunt of the former’s greed. The spirit of the Greek revolt has not been forgotten, however, for it is clear whose interests the police serve and protect (as America was recently reminded in Oakland).

As Iceland became the first country to fall due to popular revolt against the economic elite, and then proceeded to elect their first female PM, who is also openly gay, things are heating up around the globe. Recently, over 1,000 protesters assembled illegally to protest the World Economic Forum in Geneva, Switzerland, and while the protests were overwhelmingly peaceful, fear of unrest prompted the police to systematically target and arrest known and identified militants and revolutionaries.

As GNN’s Grady reports, in China “2,000 workers and farmers held wage protests for twelve days outside of Shanghai” in December 2008, “striking workers and security guards clash in a textile factory in Dongguan” on January 15th, and on January 16th, “100 police officers stage a rally in Shenzhen after being sacked from their jobs.” The Times Online also reports that in the southern province of Guangdong, “three jobless men detonated a bomb in a business travellers’ hotel in the commercial city of Foshan to extort money from the management.” In the 12 days of mass demonstrations last December, the Times reports:

…angry workers besieged labour offices and government buildings after dozens of factories closed their doors without paying wages and their owners went back to Hong Kong, Taiwan or South Korea. In southern China, hundreds of workers blocked a highway to protest against pay cuts imposed by managers. At several factories, there were scenes of chaos as police were called to stop creditors breaking in to seize equipment in lieu of debts.



Jim Sinclair’s Commentary

Today in the stinking criminal under-world of hedge fund lowlifes:

Judge asks whether guards can use deadly force should Marc Dreier …
New York Daily News – New York,NY,USA
Dreier, 58, is accused of duping hedge fund investors out of nearly $400 million through a scheme to sell fake promissory notes. Shargel estimates that the …

Shredded letter haunts accused hedge fund swindler in court
New York Daily News – New York,NY,USA
BY THOMAS ZAMBITO Prosecutors cited more than just a shred of evidence Tuesday against a hedge fund manager accused of ripping off clients – they …

LuxAlpha Liquidation Sought by Regulator Over Madoff
Bloomberg – USA
3 (Bloomberg) — Luxembourg’s financial regulator will ask a court to liquidate Access International Advisors LLC’s LuxAlpha Sicav-American Selection fund …

Mass. fund fires firm that put money with Madoff
Reuters – USA
By Svea Herbst-Bayliss BOSTON, Feb 3 (Reuters) – Massachusetts’ state pensionfund fired a hedge fund firm on Tuesday that lost millions by putting money …

The Criminal Report Daily : Investigation Discovery: Missing …
By David Lohr 
Arthur G. Nadel, the missing 76-year-old hedge fund manager from Sarasota, Fla., was arrested last week after turning himself in to federal authorities. According to the US Attorney’s Office, Nadel, accompanied by two …

Jailed Hedge Fund Manager to Face Charges in New York — Attorney …
By timgrenda 
Nadel, 76, managed six New York-based hedge funds, but disappeared in January 2009 after investors learned their accounts had been drained. He remained missing for several weeks until federal investigators tracked him down in Tampa, Fla. and placed him under arrest. … The investigation into Nadel’s handling of customer investments began in the wake of the arrest of another New York money manager accused of defrauding investors. That man, Bernard Madoff, …

Hedge Fund Zone » Luxembourg to shut down Madoff-linked hedge fund
By Yahoo! News – Search Results for "hedge fund" 
Find the best information on hedge funds! … Hedge Fund Zone. "It’s Time to Discover the BEST Information About Hedge Funds!" February 3, 2009. Luxembourg to shut down Madoff-linked hedge fund. Luxembourg financial supervisors said …

Reporter Arrested At Madoff’s Front Door | FINalternatives
By Jon Shazar 
There were more losers than winners in the hedge fund universe last year as fundsgrappled with a deteriorating credit market and a global equity sell-off. One firm that bucked the trend with its strong performance was …

Arrest in suspicious powder mailings to be aired – Texas News …
By Examiner Texas Headlines 
Arrest in suspicious powder mailings to be aired – Texas News, 2009-02-03 14:57:33 on, all news no fluff.

Jim Sinclair’s Commentary

Between an ally denying the US a key airbase and this push out of Pakistan, President Obama is being challenged in a pincer move in Afghanistan.

Taliban Destroys a Key Bridge in Pakistan

Main Supply Route For U.S. Is Cut Off
By Candace Rondeaux
Washington Post Foreign Service
Wednesday, February 4, 2009; Page A12

ISLAMABAD, Hundreds of trucks bearing NATO supplies idled at terminals near the city of Peshawar in northwestern Pakistan on Tuesday after Taliban fighters blew up an iron bridge about 15 miles away. The explosion, the latest in a spate of attacks, cut off the main supply route for U.S.-led forces in Afghanistan, complicating plans to substantially increase the Western military presence there and roll back recent gains by Taliban forces.

For a quick look at the state of the war on terrorism in Pakistan and Afghanistan, one need travel only as far as Peshawar’s Karkhano Market. Set at the edge of the sprawling city of 3 million in a dusty warren of ramshackle kiosks, the 24-year-old market has long been known as a key smuggling hub for the hundreds of traders who regularly cross the mountainous no man’s land that lies between Pakistan and Afghanistan.

Business has been especially brisk in recent months, in the wake of more than a dozen major Taliban attacks on NATO supply routes and the creeping encroachment of insurgents in northwest Pakistan, according to Karkhano shopkeepers. Goods pilfered from raids on NATO supply trucks have become a mainstay for shopkeepers like Noor Mohammed.

Customers at Mohammed’s small kiosk can easily purchase a set of American-made tools or an American flag or a durable American-made pistol holder. A U.S. military-issue ammunition vest and staff sergeant’s sun cap together cost a mere $20. "It’s not a problem to get anything here as long as you have the money," Mohammed said. And, with AK-47 assault rifles selling for about $1,000 apiece, profits have never been better.


Militants killed, NATO trucks targeted in NW Pakistan

From Zein Basravi

ISLAMABAD, Pakistan (CNN) — Conflict raged Wednesday in volatile northwestern Pakistan, with nine militants killed in a gun battle, the Taliban’s abduction and release of about 30 police officers, and strikes on stranded NATO trucks.

It’s the latest fighting between Pakistani security forces and the Taliban militants in the northwestern region near Afghanistan.

The country’s central government has little control in the area, and U.S. intelligence officials say the area is a haven for militants.

Nine militants were killed when police and local residents foiled an attempted kidnapping of the mayor in a village on the outskirts of Peshawar, police told CNN. Taliban fighters attempted to abduct Fahim Ur Rehman, but police and residents resisted and a gun battle ensued.


‘Taliban seize’ Pakistan policemen

Thirty Pakistani policemen are reported to have been captured by Taliban fighters in the northwest Swat Valley after they laid siege to a police station.

"Taliban kidnapped 30 policemen and blew up the police office after a day-long fight," Dilawar Khan, a regional police commander, said on Wednesday.

Army troops were sent to the Shamozai area in an effort to rescue the police officers but the operation was suspended after dusk fell, security officials said.

Four paramilitary and police officers were wounded in the clashes around the police station, a Pakistani intelligence official said.