Posted at 4:16 PM (CST) by & filed under In The News.

Dear CIGAs, 

The last pillar required for a massive gold move is the 30 year USA long bond breaking below its 35 year up trend line.

The most important points: 

“America is bankrupt. American government bonds are extremely overvalued. “The world’s last bubble.” America is in debt for over 13.000 billion (13 trillion) dollar and adds a 1.000 billion dollar debt each year. According to Rogers this can not continue for long. Therefore, he went short in long-term US goverment bonds. “These bonds have peaked.” By the way: Rogers owns Dutch government bonds. “They are safe.”

“The fact that the dollar is gaining rapidly is only temporary”, Rogers says. “All hedge funds were short on the dollar and because of the appreciation of the dollar there is a short squeeze for the dollar. Managers have to close thier positions and they have to buy dollars instead.” “This is temporary, within a year you have to get rid of the dollar. Fundamentally it is a drama.” 

Jim Rogers: America is bankrupt (English version)

America is bankrupt, according to investment legend Jim Rogers. “The American government bonds are the world’s last bubble and the price of commodities has to increase.”

Charismatic
The famous and charismatic investor, guru if you will, Jim Rogers, visited ABN Amro Netherlands last Friday. RTL Z was at ABN headquarters as well and recorded a number of statements, investment tips and opinions about the world economy.

Rogers
During the seventies Jim Rogers (66) managed a successful hedge fund with George Soros. After that, he traveled and went into commodities. Click here for the wikipedia entry for Rogers. 

Last Friday Rogers went at it in front of a roomful of ABN private banking clients. We had an exclusive 15-minute interview with Rogers.

More…

Jim Sinclair’s Commentary

More from Pakistan. The drones did it. 

Pakistan condemns U.S. missile strikes
SAEED SHAH
November 3, 2008 at 10:39 PM EST

ISLAMABAD – Tensions increased between Pakistan and the United States Monday when President Asif Zardari and other officials roundly rebuked American military commander General David Petraeus over U.S. missile strikes inside Pakistan.

Gen. Petraeus, credited with pulling Iraq away from the brink, has now been charged with developing a strategy to rescue the war in Afghanistan. He has overall charge of the Middle East and Central Asia, including Iraq and Afghanistan, as head of U.S. Central Command, and made Pakistan his first visit to the region.

Pakistan’s co-operation is considered vital if the Taliban insurgency in Afghanistan is to be quelled, but Islamabad has been incensed by U.S. missile attacks inside its territory against suspected militants. 

Mr. Zardari told Gen. Petraeus, according to a statement issued by the President’s office, that “continuing drone attacks on our territory, which result in loss of precious lives and property, are counterproductive and difficult to explain [for] a democratically elected government. It is creating a credibility gap.” on those bombing drones.

More…

Jim Sinclair’s Commentary

When the lower rate is so desirable I imagine the feeling among regulators, officials and of course the obedient brown nose media is that of “who cares.”

Note there is no media coverage of the strong doubt remaining amongst rational people that Lie-bor, as a tool of the bankers, does the necessary in the best interest of those who report their cost of dollars that constitute the much watched Libor rate.

Maybe they will declare Libor at ½ percent soon.

London Interbank Offered Rate (LIBOR)

Definition:
Interest rate at which the London banks are willing to offer funds in the inter-bank market. LIBOR is the average of rates which five major London banks are willing to lend $10 million for a period of three or six months, and is the benchmark rate for setting interest rates for adjustable-rate loans and financial instruments.

Link…

 

Bankers Cast Doubt On Key Rate Amid Crisis
By CARRICK MOLLENKAMP

 LONDON — One of the most important barometers of the world’s financial health could be sending false signals.

In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable.

Libor plays a crucial role in the global financial system. Calculated every morning in London from information supplied by banks all over the world, it’s a measure of the average interest rate at which banks make short-term loans to one another.

More… 

 

Lie-bor?
by Jeffrey Cane  Apr 16 2008

Questions grow about a major rate.

One of the arcane financial acronyms that has gained much prominence over the course of the credit crisis is Libor-the London interbank offered rate. It is the average interest rate when banks make short-term loans to one another.

It is one of the most important credit benchmarks, used by banks and financial institutions around the world.

Carrick Mollenkamp of the Wall Street Journal reports that there are growing suspicions that some banks may be underreporting the rates they are paying for short-term loans, undermining the accuracy of the Libor. 



His report is a startling revelation. If the Libor is viewed as unreliable, the credit crisis may be much worse than previously thought, with borrowers receiving loans tied to the index getting a cheaper rate than they should.

More… 

 

Jim Sinclair’s Commentary

Brokerage full service retirement plans will be retired before you will. Gold is all that will protect your retirement.

Lehman Good-for-Retirement Notes Worth Pennies for UBS Clients
By Bradley Keoun and David Scheer

Nov. 3 (Bloomberg) — UBS AG, Switzerland’s largest bank, faces dozens of claims in the U.S. from clients who bought “100 percent principal protected notes” issued by Lehman Brothers Holdings Inc. that are now almost worthless.

Six attorneys hired to represent clients in the cases say UBS brokers touted the so-called structured notes as low-risk investments and failed to emphasize they were unsecured obligations of Lehman, which filed for bankruptcy in September. State regulators are fielding so many calls about Lehman’s notes they’re considering a task force to investigate the sales, said Rex Staples, general counsel for the North American Securities Administrators Association Inc., a group of 67 state and provincial regulators based in Washington.

“The sales pitches were that it’s good for retirement accounts, and good for the safe, fixed-income part of people’s portfolios as an alternative to owning stocks, because it’s less risky,” said Seth Lipner, a lawyer in Garden City, New York, hired by two holders of Lehman notes sold by UBS, including a 65- year-old accountant who says he lost $1.4 million in retirement savings. “Of course, it turned out to be more risky.”

Any awards for investors would add to the financial industry’s burgeoning costs for compensating individuals who bought supposedly safe investments that crumbled in the credit crunch. Banks and securities firms, including Zurich-based UBS, Citigroup Inc. and Merrill Lynch & Co., already have had to swallow more than $3.6 billion in fines and market losses on auction-rate securities they had to buy back from clients under orders from the U.S. Securities and Exchange Commission and regulators in New York, Massachusetts and other states.

More…

Posted at 11:18 PM (CST) by & filed under Jim's Mailbox.

Jim,

Last Thursday afternoon I dropped into the local Suzuki automobile dealer in order to have a look at the new SX4 AWD mini crossover. The sales manager and I got chatting about the economy and as it turns out, he was quite knowledgeable on the subjects that we all read regularly on JSMineset.com. This gent was involved in real estate investing on the side; specifically going to bank auctions, the ones where the bank is doing an absolute auction of properties they have already taken under a prior foreclosure.

He told me that one should not listen to any of the ‘reports’ of housing price declines, because they do not honestly reflect what is going on out there for the educated buyers. He told me that he was at an auction last week of several fairly new 3 bedroom homes on 4 acres across the street from a local lake here in New Hampshire with water rights and they were selling for $35K each at auction. I asked him how much these houses had originally sold for and he said $300K a few years ago!! I asked how many he picked up… he said none! I asked why at 11 cents on the dollar did he not buy anything? He told me that he is watching the stress in the markets closely and he feels they still have much further to go on the downside. His high bid was $25K and that’s all he is willing to pay.

He then told me of a very nicely renovated old farmhouse with attached large barn on an in town city lot of about ½ acre up near the lakes region in NH that was quite valuable that sold for $65K at bank auction a week or so ago. He said the inventories are full of this stuff and it’s going to get much worse. WOW! And none of this is being broadcast anywhere! He explained that he is on a series of auction listing sites which supply him the [real] data and offerings. It’s getting very ugly out there if this is all true information.

CIGA Bruce

CIGA Bruce,

Who said things were much worse internationally than in the good ole USA?

Regards,
Jim

Posted at 4:30 PM (CST) by & filed under David Duval.

Dear CIGAs,

Market corrections are never painless but this particular one seems more like a flesh-eating disease, consuming a little bit of the patient (and impatient) every day.

My sense of things is that if we haven’t found a bottom in metal markets yet, we are very close. Supply-demand fundamentals are bound to work their way back into the marketplace and prices for key industrial commodities will begin to reflect that fact. Most of the carnage inflicted on commodities in my view has come from an appreciating dollar; and when demand for U.S. treasuries starts to wane, the dollar will weaken and commodities will begin to rise. (We saw the early signs of this in the last trading days of October).

In the past week, I’ve read about several metal producers shutting down operations while others have put new projects on the back burner. In the former camp is Brazil’s Vale do Rio Doce (RIO), the world’s largest iron ore producer. RIO recently confirmed it would substantially cut iron ore production as demand for steel slumps because of the global economic downturn. Steel companies across the globe have cut production by 20-40% and until demand stabilizes and begins to recover, iron ore companies will continue to feel the pinch.

Investors in commodities associated with steel production (metallurgical coal, nickel, zinc, molybdenum and chromium) face significant investment risk in such an environment unless companies are selling under long term contracts. Once the panic selling of commodities abates, it will be much easier to determine which commodities present the best investment opportunities. My bet is that it will happen soon. What people tend to forget is the fact that fiscal and monetary reflation on a global scale never seen before is only just beginning. With all this money being pumped into the global financial system, commodities will get their fair share.

More… (in PDF format)

Posted at 3:31 PM (CST) by & filed under In The News.

An observation of the mercurial manipulation of the paper gold price and our need to stop whining and start pushing back:

If tonight there were 1,366 millionaires who would purchase Comex gold contracts and take delivery of that value of gold, the manipulation would end.

Note the gold Bank Hammer that hit as the Comex gang were just ending their morning naked Wicca services.

 

Jim Sinclair’s Commentary 

Who said things are far worse internationally than in the good ole USA? 

GM Oct. sales fall nearly half; Ford drops 30 pct.
Monday November 3, 2:26 pm ET
By Tom Krisher and Bree Fowler, AP Auto Writers 

GM’s US sales plunge 45 pct., Ford down 30 pct.; industry could have worst month in 25 years

DETROIT (AP) — General Motors’ October U.S. sales plunged 45 percent and Ford’s dropped 30 percent, as low consumer confidence and tight credit combined to scare customers away from showrooms. 

The results released Monday — along with a 23 percent drop at Toyota and a 25 percent decline at Honda — are strong indications that sales for the industry as a whole may perhaps be the worst in 25 years.

Detroit-based General Motors Corp. said its light trucks sales tumbled 51 percent compared with the same month last year, while demand for passenger cars fell 34 percent. 

The results were less severe at Ford Motor Co., which said its Ford, Lincoln and Mercury car sales were off 27 percent, while light truck sales for the three brands were down more than 30 percent.

More…

 

Sacked Lehman Brothers Bank Employees Blockade Head Office

Dear Friends,

This is the oxymoron of the century and a formula for a very weak dollar and hyper-inflation in the midst of ugly business conditions. All of this will become evident quite soon, probably after Christmas.

The Fed as a central bank to the world
Jacqueline Thorpe, Financial Post
Published:Sunday, November 02, 2008

Nicolas Sarkozy may be pushing for a new financial order but Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson have beaten him to it.

While the French President dreams of global economic cooperation ahead of the G20 summit in Washington, the Fed is quietly becoming central bank to the world, backed by the full might of the U.S. Treasury and a teflon-coated greenback.

Last week saw a new program added to the barrage of bailouts, backstops and stimuli announced by the United States — US$30-billion currency swap lines for Brazil, Mexico, South Korea and Singapore. This is on top of the unlimited supply of greenbacks the United States has provided to the major economies.

The United States will swap wons for greenbacks, allowing South Korean banks to fulfill local demand for U.S. dollars, which had been starved by the freeze-up in the inter-bank lending markets. Banks can then provide those greenbacks to their local customers to allow them to carry out international business.

In April, South Korea will swap its wons back, for a fee of course. David Rosenberg, chief North American economist at Merrill Lynch was quick to pick up on the irony. “The U.S. was supposedly the basket case nation with the massive deficits whose currency was destined to lose its reserve status and whose credit rating was going to get cut at some point,” he said in a note last week. “It is the U.S. that is being called upon to provide unlimited swap lines with Europe one day, and funding for emerging markets the next.”

More…

Currency Swap:

A swap that involves the exchange of one currency (e.g., US dollars) for another (e.g., Japanese yen) on a specified schedule.
www.cftc.gov/educationcenter/glossary/glossary_co.html

Jim Sinclair’s Commentary

Swaps may be dated for maturity by mutual agreement between parties. I sense that these swaps now financing the planet are from the Fed through the bouquet of perma-swaps in the form of 28 day perma-loans at the Begging Bowl Loan Window.

Jim Sinclair’s Commentary

No problem, just call the Fed and they will make good on a perma 28 day loan.

Citi says credit card losses may rise through 2009
Bank suffers $1.4 billion hit from card-backed assets in latest quarter
By Greg Morcroft, MarketWatch
Last update: 1:44 p.m. EST Nov. 2, 2008

NEW YORK (MarketWatch) — Citigroup said that it lost $1.4 billion in the third quarter from credit card securitizations and that it expects such losses will continue, possibly reaching record levels in 2009.

The result compared to a gain of $169 million from credit card securitizations in the year-earlier period.

“Credit card losses may continue to rise well into 2009, and it is possible that the company’s loss rates may exceed their historical peaks,” the banking giant said in its filing with the Securities and Exchange Commission late Friday.

Citi (C:13.77, +0.12, +0.9%) also said it added $3.9 billion to overall credit reserves, including $2.3 billion for its North American consumer business and $855 million for consumer business outside the U.S.

Citi said the additional reserve to the North American segment was mostly due to a weakening of leading credit indicators, including higher delinquencies on first mortgages, unsecured personal loans, credit cards and auto loans.

More…

Jim Sinclair’s Commentary

Do it soon or lose the opportunity soon.

Physical Certificates Take a Step Closer to Extinction
by Edward C. Kelleher

The Depository Trust Company, (DTC), a DTCC subsidiary, has announced it will no longer issue physical certificates for withdrawals-by-transfer (WTs) for more than 5,500 issues beginning January 1, 2009.

DTC plans to eliminate WTs of physical certificates for all issues that participate in DTCs Direct Registration System (DRS). Instead, DTC will process these WTs in DRS statement form. This change is pending approval by the Securities and Exchange Commission (SEC). (About 1,550 additional issues are eligible for, but not participating in, DRS and do not offer the investor the opportunity to receive a DRS statement.)

If permitted by an issuer, investors may take their DRS statement to their transfer agent and exchange it for a physical certificate.

DTCs DRS is a book-entry system that enables investors to register their shares electronically with the issuing company or its transfer agents. Instead of a paper certificate, investors receive a statement of their holdings. In 2008, all the major and regional exchanges in the United States mandated that DRS become a listing requirement for all issues. (DTC is the only registered clearing agency operating a DRS.)

More…

Jim Sinclair’s Commentary

Now that we know there is a serious situation due to the decline of gold reserves without any present relief in the inventory of the majors, please consider the following article.

Mining consolidation anticipated
Peter Koven, Financial Post
Published:Sunday, November 02, 2008

Since mining industry share prices began their historic collapse several weeks ago, investors have wondered when the inevitable consolidation will begin.

According to law firm Fasken Martineau, it is only a matter of time before it gets underway. However, this round of consolidation will look nothing like the last one, and it will not be led by the large companies like Xstrata PLC that dominated the last cycle.

In a presentation to mining industry insiders late last week, Fasken partner Greg Ho Yuen advanced the theory that the intermediate companies will be the ones that kickstart a new wave of acquisitions rather than the senior companies.

The reason is that the sudden fall in commodity prices is forcing the majors to take time to re-evaluate all of the multi-billion-dollar mine developments they were planning. The more nimble intermediate producers will be able to take advantage of the weak markets faster to buy up distressed juniors.

“Because intermediates are smaller and more focused on a few projects, their period of self-evaluation will have either been completed or can be completed very quickly,” Mr. Ho Yuen said in an interview.

More…

Jim Sinclair’s Commentary

Come on, the drone did it, not the US!

Pakistan Warns U.S. Against Further Airstrikes on Tribal Areas
By Candace Rondeaux
Monday, November 3, 2008; 10:40 AM

ISLAMABAD, Nov. 3 — Pakistan’s defense minister cautioned the newly appointed head of the U.S. Central Command on Monday that launching further missile strikes in the country’s troubled tribal areas could increase tensions between the two countries.

Pakistani Defense Minister Chaudhry Ahmad Mukhtar issued the blunt warning to Gen. David H. Petraeus during his first official visit to Pakistan as head of the U.S. war in neighboring Afghanistan. Mukhtar, who also called for more coordination between the U.S. and Pakistani militaries, said the recent increase in U.S.-led cross-border strikes had created “bad blood” between the two allies. On Friday, 27 people were killed in two separate U.S. airstrikes in northwest Pakistan.

The Pakistani Defense Ministry said in a statement released shortly after the meeting that frequent attacks inside Pakistan by U.S. Predator drones “could generate anti-American sentiments” and “create outrage and uproar” among Pakistanis.

Petraeus, who took charge of the wars in Afghanistan and Iraq on Friday, and U.S. Assistant Secretary of State Richard A. Boucher met with Mukhtar and Pakistan’s top military officer, Gen. Ashfaq Kayani. It was part of the first leg of a tour that is expected to include a visit soon to Afghanistan.

More…

Jim Sinclair’s Commentary

Look for fiscal stimulation next. How about a new Roosevelt CCC?

Worst job losses since March 2003 predicted
Jobs, manufacturing, credit data to be released
By Ruth Mantell, MarketWatch
Last update: 12:01 a.m. EDT Nov. 2, 2008

WASHINGTON (MarketWatch) — Retailers may not be so merry as this holiday shopping season gets underway.

Consumer confidence hit an all-time low in October, buried under heap after heap of dismal financial and economic news. Worried consumers aren’t going to be rushing into stores or splurging on holiday gifts.

In recent days, data have shown that U.S. consumer spending in September was down 0.4% on a year-over-year basis, the first such drop since the recession of 1991. And it turns out that the U.S. economy contracted at a 0.3% annualized rate in the third quarter, as consumer spending declined at the fastest rate in 28 years.

Why such worry? On top of watching their retirement savings dwindle and foreclosure notices rise, reports about mass layoffs keep rolling in. With weekly initial claims for state jobless benefits hugging the half million mark, a bottom of the labor market doesn’t appear to be in sight.

More…

Posted at 1:31 AM (CST) by & filed under General Editorial.

Dear CIGAs,

As letting Lehman declare bankruptcy proved without any doubt, once you start Federal bailouts of all and everything you cannot stop.

They have opened a Pandora’s Box of providing dollars at home and at the home of all of the near and dear allies.

There is no way out now. The supply of dollars has risen in an unprecedented manner and this is only a harbinger of what lies ahead.

There is no way that a strong dollar can sustain itself alongside an  avalanche of new dollars being created electronically to hold up every major business, OTC derivative manufacturer and financial entity worldwide.

Here are a few requests coming this month.

Officials Seek Transit Rescues 
Total Exposure Could Be Up to $4B Bond Buyer  |  Oct 27 
WASHINGTON – State officials and lawmakers Friday were holding emergency meetings and pressing the Treasury Department to rescue public transit deals facing billions of dollars of payments.

Treasury Urged to Back SILO, LILO Deals Bond Buyer  |  Oct 28 
WASHINGTON – The Treasury Department must take the place of American International Group Inc. as guarantor of transit agency sale-leaseback deals to avoid “financial disaster” for state and local governments, a group of lawmakers warned Treasury and Federal Reserve officials yesterday.

JPMorgan Ditches $300M Deal; Miami-Dade Left in the Lurch Bond Buyer  |  Oct 27 
BRADENTON, Fla. – When JPMorgan Chase refused to renew a standby bond purchase agreement that expired Sept. 29 for more than 90 days, Miami-Dade County was forced to seek a substitute provider for nearly $300 million of variable-rate demand water and sewer bonds issued in 2005.

Alabama Files to Void Swaption 
State Wants to End Deal With JPMorgan     Bond Buyer  |  Oct 30 
BRADENTON, Fla. – Alabama on Tuesday filed a complaint in federal court asking a judge to void a swaption the Alabama Public School and College Authority entered into in 2002 and 2003 with JPMorgan.

S.F. Airport Restructuring No Laughing Matter Bond Buyer  |  Oct 27 
SAN FRANCISCO – As the auction-rate securities market meltdown raged this spring, San Francisco International Airport rushed to restructure hundreds of millions of dollars of ARS with variable-rate demand obligations, trying to beat other issuers to the market before liquidity dried up.

WMATA Seeks Court Order Against Creditors Bond Buyer  |  Oct 30 
WASHINGTON – The Washington Metropolitan Area Transit Authority sought court action yesterday to prevent it from having to make a $43 million termination payment on a sale-leaseback deal guaranteed by American International Group Inc.

Groups Want Facility for ARS Conversions Bond Buyer  |  Oct 29 
As liquidity for municipal issuers remains scarce in the short-term market, a regional broker-dealer group and an organization representing nonprofit student loan lenders are urging the Treasury Department to provide standby liquidity facilities for issuers still trying to convert from auction-rate securities to variable-rate demand obligations.

Posted at 1:28 AM (CST) by & filed under Jim's Mailbox.

Dear Jim,

It is quite apparent that physical gold coins are very difficult to get anywhere in the US and in many parts of the world. I have called a few local shops to test for availability and there is none. The best alternative I got was a large premium over spot on a bullion gold ounce, to be paid to the dealer up front and then a long wait time for delivery. The days of walking into a shop and purchasing a coin or two are gone, and we don’t know if or when those days will return.

Internet coin dealers are in the same boat, not much available and high premiums and wait times for all types of bullion and numismatics. It seems that the logical extension of this phenomena is spreading to the Comex in the US. Ultimately there will be a showdown for gold in lieu of the intense worldwide demand for physical. Nothing can take the place of the real thing. Gold ETFs by extension may have difficulty in getting physical gold to back their deposits, they may limit new investors or change their rules to hold less gold per outstanding share. Gold ETFs may experience a period of intense scrutiny about what they truly own, which may cause investors to shy away from them as gold investment vehicles.

When push comes to shove and gold finally makes its move up and through the old highs from this year, it will be understood by everyone that gold is in a real bull market. It will be easily understood by the man in the street as he will see the financial upheaval and wealth destruction talked about here on JSMineset. The dollar’s buying power will plummet and the small investor will realize that gold is what he will need. Inflation will be unable to hide any longer.

And if the coin shops are empty and there is no real way to get gold in hand, there will be only one quality substitute, Gold Stocks and Gold Mutual Funds, and possibly not Gold ETFs. Senior, Mid-Tier, and Junior gold stocks will skyrocket as there will be no real physical way for the average investor to participate in the Gold Bull Market that is coming. The watertight doors are closing: gold coins, small gold bars– these door are now shut, (large bars next?), (ETF’s next?).

Quality gold stocks are selling at 2003 gold prices, some at 2001 giveaway prices. Even though the ship is listing, there are still lifeboats available on this ship! Soon these boats will be lowered away as the last vehicles of gold financial survival, and even then one must take the precautions set out here on JSMineset to distance yourself from financial entities that are between oneself and one’s assets.

In my opinion, time seems short and the band on deck is playing a happy tune. 

Ciga Ken

Dear Ken,

You are 100 percent correct.

Regards,
Jim