Posted at 12:25 AM (CST) by & filed under General Editorial.

Dear CIGAs,

Remember when Barrons did the hatchet job on Royal Gold?

Now here is a Royal Gold article that you will find interesting. In my opinion, technically RGLD has at least an $80 number on it.

Gold Royalty Companies Outshine Gold Miners, Bullion
Monday, February 16, 2009 9:30:00 PM (GMT-08:00)
By Matthew Walls

LONDON (Dow Jones)–Companies that buy royalties from miners of precious metals are proving attractive to investors who are bullish on gold but find stock in mining companies too risky and bullion too staid.

Two of the biggest royalty companies, Canada-listed Franco-Nevada Corporation (FNV.T) and Utah-based Royal Gold Inc. (RGL.T), have returned 31% and 58% respectively over the last year, easily outdistancing bullion and greatly outperforming mining equities, according to Morningstar.

Record-high prices for gold, silver and platinum helped as investors turn to traditional safe havens to ride out a very uncertain outlook for the global economy. But so has the business model of the companies: Buying royalties gives them full exposure to precious metal prices without exposure to miners’ operating risks and costs, which until recently have hurt miners.

Some analysts believe the miners – which were sold off heavily in last year’s turmoil – should outperform royalty companies in 2009. The collapse in oil prices, stagnant wage costs and price declines in other inputs should lower miners’ operating costs and fatten their margins. A U.S. index for gold miners, the New York Stock Exchange’s Arca Gold Miners Index, appears to back this up. The index is up 87.93% in the past three months.

But royalty companies, despite a more conservative business model, have rallied nearly as much, with Canada-based Silver Wheaton Corp. (SLW) up 133.12% in the same period.

One attraction right now may be their extremely high margins – around 80% – versus 30% to 50% for miners. Royal Gold, a company with a market capitalization of $1.6 billion, has just 14 employees. In today’s tight credit environment, these high cash flows allow them to buy new royalty purchases with little debt.

"There’s a big premium for any liquidity in the market now," said Franco-Nevada Chief Executive David Harquail. "There’s many more companies looking to create new royalties."


Posted at 6:46 PM (CST) by & filed under General Editorial.

Dear CIGAs,

We all are pressed for time here because of the press of both corporate responsibilities and our desire to help you all through trying times safely.

As we begin to see the many ETFs for gold from all over the globe, our curiosity peaks. It simply looks impossible that all these enterprises are anything but paper tigers operating primarily in OTC derivatives, even if in some cases this is contra to their stated purposes.

It would be extremely helpful if any of you dealing with or familiar with the far flung world of ETFs would send us the latest reported levels of gold holdings, sourced with the name and exchange upon which the fund is trading. Alternatively, if you have proof ETFs are trading only paper, that information would be useful as well. All help would be deeply appreciated. Please provide sources!

Please email replies to Editor Dan at

Thank you all for your help,

Posted at 6:39 PM (CST) by & filed under Uncategorized.

Dear Jim,

China ain’t dopes. China knows that energy shortages will reappear within a few years and they want to be covered. Within a few years China will be the world’s largest economy.

Respectfully yours,

Monty Guild

UPDATE 4-China lends Russia $25 bln to get 20 years of oil
By Robin Paxton and Vladimir Soldatkin

MOSCOW, Feb 17 (Reuters) – China has agreed to lend Russian oil companies $25 billion in return for supplies from huge new East Siberian oilfields that will power its economy for the next two decades.

Russia’s state oil champion Rosneft (ROSN.MM) and pipeline monopoly Transneft (TRNF_p.RTS) on Tuesday signed a long-delayed deal to borrow the money from China Development Bank during talks in Beijing, sources close to the deal told Reuters.

"We agreed on supplies of 15 million tonnes of oil every year over a period of 20 years," Russian Deputy Prime Minister Igor Sechin told state news channel Vesti 24. He said a separate loan deal was signed but gave no further details.

Transneft Vice-President Mikhail Barkov said his company would receive $10 billion of the loan and Rosneft the other $15 billion. Rosneft declined to comment.

"The maturity is around 20 years and this credit is linked to supplies," Barkov told Reuters. "It is a historic event and the start of a big journey."


Posted at 4:38 PM (CST) by & filed under In The News.

My Dear Friends,

Whatever hope you have for a new personality to make a difference in government, remember the teaching given to us all by our Past Masters:

“There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.”
–Daniel Webster

Jim Sinclair’s Commentary

I have no argument with the following thesis. I would however push the serious social unrest out into very late 2009 at the earliest.

In 2009 we’re going to see the worst economic collapse ever, the ‘Greatest Depression’, says Gerald Celente, U.S. trend forecaster. He believes it’s going to be very violent in the U.S., including there being a tax revolt.


Jim Sinclair’s Commentary

As the "Too Big to Fail" banks get bailed out and the "Too small to be concerned about," roll over, we are building but a few mega corporations to be the engines of tomorrow’s Robber Barons.

I am convinced that when Lehman was dumped to accelerate the decomposition of the international economic corpse, our planners did not foresee the degree of the implosion now without any practical solution whatsoever.

This is why it has all hit the Fan.

What do you do when you have stolen all the dollars? You then rule over but a Paper Empire, the gene pool of serfs having been economically cleansed. Now here is a good argument for the Federal Reserve Gold Certificate Ratio modernized and revitalized.

HuffPost Contest: Name That Bank Seizure
February 16, 2009

Republican Sen. Lindsey Graham of South Carolina stunned political observers on Sunday when he said that "the idea of nationalizing banks" must be kept on the table, even if it makes him "not comfortable."

Moments earlier, Rep. Maxine Waters (D-Calif.), who agrees with Graham, lamented that "the word ‘nationalization’ scares the hell out of people."

Indeed, many who support a policy of ‘nationalization’ say the term is neither an accurate description of the policy nor politically helpful. (For more, read Arianna’s recent column, "Why is Obama Reluctant to Kill the Zombie Banks Threatening Our Economy?")

So what should ‘nationalization’ be called instead?

To enter our name-that-bank-seizure contest, drop your suggested replacement term in the comments section. We’ll highlight the best suggestions in a post later this week and, and use the winner when referring to nationalization. As more economists argue that nationalization is increasingly a matter of when rather than if, it’s a reference that will be popping up with rising frequency.


Jim Sinclair’s Commentary

This is dramatically true if the IMF was to be a seller of any gold. What a great opportunity for central banks around the world to get rid of what has been and will again be their Toxic Paper, the US dollar.

CBRC Official Says U.S. Bonds Not Only Option, China News Says
"U.S. debt is one option in addition to gold and other government debt,"
By Judy Chen

Feb. 13 (Bloomberg) — China Banking Regulatory Commission official Luo Ping said holding U.S. government bonds is not the only option for investing reserves, clarifying comments made a day earlier, the China News Service reported.

U.S. debt is one option in addition to gold and other government debt, Luo, head of the training center at the banking regulator, was quoted as saying in an interview with the news agency late yesterday. If the U.S. government issues too much debt in its efforts to revive the economy, all Treasury holders will suffer losses, he added, the Chinese-language report said.

Dow Jones on Feb. 11 cited Luo as saying that there are few real alternatives to holding U.S. Treasury securities. CBRC said late yesterday in a statement that Luo’s comments don’t represent the view of the regulator.


Gold Scams Galore:

Here is an example of pay for it in the USA and get it in a tax shelter country. Guess what, you are screwed, you got nothing.

This was not gold but the form of the gold scam follows the form of this scam.

Remember this when you sign up for the gold deal that helps you, wink, wink, get out from under Uncle.

These deals search for the terminal gullibility, preaching fear to get you to act.

They tell you what you want to hear in order to pick your pocket.

"Gold Caveat Emptor."

U.S. Accuses Texas Financial Firm of $8 Billion Fraud
Published: February 17, 2009

HOUSTON — Stopping what it called a “massive ongoing fraud,” the Securities and Exchange Commission on Tuesday accused Robert Allen Stanford, the chief of the Stanford Financial Group, of fraud in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group.

In the complaint, filed in Federal District Court in Dallas, the S.E.C. accused Mr. Stanford and two associates — James M. Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate, and Laura Pendergest-Holt, the chief investment officer of both organizations — with misrepresenting the safety and liquidity of the uninsured CDs.

The C.D.’s were sold by Stanford International Bank through the firm’s registered broker-dealer and investment adviser, which are in Houston. Both the bank, which claims $8.5 billion in assets and 30,000 clients in 131 countries, and the brokerage unit, which operates about 30 offices in the United States, were named in the S.E.C. suit. Stanford Financial asserts that it advises about $50 billion in assets.

Shortly after 10 a.m. Central time, about 40 police officers and other law enforcement officials simultaneously entered Stanford Group’s two office buildings in Houston. Many of the law enforcement personnel carried large black briefcases. Stanford group’s headquarters are in two offices in Houston, one within a tower of the Houston Galleria shopping mall, and the other across the street.


Jim Sinclair’s Commentary

Your retirement has gone Missing.

Those now comfortably retired for life with your retirement don’t give a damn.

Slowly the most egregious of what has been stolen emerges – your plans for your future.

Your pensions, all of them, having been savaged by the OTC derivative manufacturers and distributors are all now going to be inflated away as there is no other way.

Keep in mind an axiom: There is no loss without a profit offsetting.

Retirement now is out of the question. You work until you are used up, and then get whatever kind of a job you can. Your best hope is to depart in your sleep. There is no other way.

Pension insurer’s deficit deepening
Tuesday,  February 17, 2009 3:01 AM

WASHINGTON — The worsening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees.

The Pension Benefit Guaranty Corp. has an $11 billion deficit that seems sure to grow as corporate America suffers through the worst economic crisis since the Great Depression.

With companies reporting shortfalls in their pension funds, it’s all but certain that the pension agency will be forced to take over the plans of a rising number of bankrupt businesses. That means more red ink at the corporation before things possibly can improve.

The future financial health of the agency is hard to forecast. It hinges on interest rates, the length of the recession and the pension agency’s own luck in playing the market, where it has billions invested.

The agency has $63 billion in assets. But it is obligated to spend $74 billion on pension benefits in the coming years. The agency might have time to rebound, but over the long term, it might become insolvent and require a bailout.

"Someday — probably more than 20 years from now — there’s a significant chance that somebody is going to have to pay the piper," said former agency Director Charles E.F. Millard, a Bush administration appointee who stepped down Jan. 20 when Barack Obama became president. "In the near to medium term, there will be no need for a bailout of" the agency.


Jim Sinclair’s Commentary

Alf’s target on gold will be reached when the markets are stunned to find out that there is no safe haven in the US dollar.

Prior to that, gold in under the magnet may reach $1224 on the simple panic now building in markets as participants recognize there is NO practical solution to the enormous disruption that OTC derivatives manufacturers, distributors and Hedgies have caused.

The BIS (Bank for International Settlement) publicly altered the manner by which they determine the total nominal value of derivatives outstanding. This has actually backfired badly now that it is assumed every entity is lying. The BIS was all that was left for somewhat legitimate economic statistics.

You probably noticed the amount of outstanding OTC derivative nominal value dropped 80% from the BIS figure of one quadrillion one thousand and one hundred forty four trillion dollars as the BIS moved to the computer modeling of value to maturity, another foolishly glib cartoon.

Euro Falls to 10-Week Low on Concern Europe’s Turmoil to Worsen
By Yasuhiko Seki and Ron Harui

Feb. 17 (Bloomberg) — The euro fell for a second day against the dollar and the yen on speculation financial turmoil in Europe will worsen and after its recent losses triggered automatic orders to sell the currency.

The pound declined versus the yen on concern a U.K. report today will show inflation slowed due to the economic slump, giving the Bank of England more room to cut interest rates. The dollar may weaken for a second day against the yen before U.S. housing and manufacturing reports that economists say will show the recession is deepening.

“The financial turbulence in central and Eastern Europe is likely to persist,” said Masafumi Yamamoto, head of foreign- exchange strategy for Japan at Royal Bank of Scotland in Tokyo and a former Bank of Japan currency trader. “The markets may perceive this as a factor to sell the euro.”


Jim Sinclair’s Commentary

The problems of bankrupt states and municipalities is only starting.

States in a financial pinch looking at drastic cost-cutting measures

(CNN) — California Gov. Arnold Schwarzenegger issued 10,000 layoff notices Tuesday, affecting a wide spectrum of state employees and aimed at dealing with the state’s budget crisis, a spokesman said.

California lawmakers resumed negotiations late Tuesday after the longest legislative session in state history over the weekend resulted in a budget impasse.

"Every state employee who receives a salary under the general fund is affected, and the governor began issuing layoff notices for the least-senior employees in various agencies," said Aaron McLear, the governor’s press secretary.

The layoffs would begin on July 1, which marks the fiscal year, and includes jobs in the Departments of Health and Human Services and Corrections, among others, McLear said. Another 10,000 layoff notices could be issued on Wednesday in other departments, he said.

The governor, facing a $42 billion deficit, was prompted to move on the layoff notices after lawmakers missed a Monday night deadline to reach a budget deal, McLear told CNN late Monday.


Jim Sinclair’s Commentary

Here is one of the little nasty players ousted.

Let see who he outs.

SEC Charges George Georgiou, a Canadian Citizen, for Market Manipulation Schemes
Thu. February 12, 2009; Posted: 03:53 PM

Feb 12, 2009 (SECURITIES AND EXCHANGE COMMISSION RELEASE/Content Works via COMTEX) — The Commission announced that on February 12, it charged George Georgiou, of Toronto, Ontario, with manipulating the market in four separate microcap stocks — Avicena Group, Inc., Neutron Enterprises, Inc., Hydrogen Hybrid Technologies, Inc., and Northern Ethanol, Inc. The Commission’s action, filed in federal district court in Philadelphia, alleges that, from 2004 through September 2008, Georgiou, who controlled the publicly-traded stock of each company, manipulated the market for the purpose of artificially inflating each company’s stock price or to create the false appearance of an active and liquid market. In order to do so, Georgiou used many nominee accounts that he either directly or indirectly controlled at offshore broker-dealers and banks, and used a variety of manipulative techniques, including matched orders and wash sales. Ultimately, Georgiou realized at least $20.9 million in ill-gotten gains from his manipulation schemes.

In addition to the enforcement action, the Commission today entered an order suspending trading in the securities of the four manipulated stocks for a ten day period commencing 9:30 a.m. Feb. 12, 2009. The U. S. Attorney for the Eastern District of Pennsylvania today separately announced criminal charges against Georgiou involving the same conduct.

The Commission’s complaint alleges that Avicena Group is headquartered in Palo Alto, California, and that the other three companies are headquartered in Canada. Each of the manipulation schemes followed a similar pattern. Georgiou controlled all or a large percentage of the unrestricted, publicly-traded stock of each company. He had influence with management, access to confidential shareholder lists, and was able to coordinate the release of company news with his illegal trading. In recorded conversations and through his own e-mails, Georgiou admitted his intent to manipulate each of the stocks, and gave directions to his nominees.

The complaint further alleges that Georgiou used many nominee accounts at offshore broker-dealers in Canada, the Bahamas, Turks and Caicos, and other locations. Georgiou asserted direct control over some accounts by issuing trading and wiring instructions directly to broker-dealers, and indirect control over others by communicating trading instructions to nominees who, in turn, executed Georgiou’s trading instructions. Through these accounts, Georgiou used a variety of manipulative techniques in each scheme, including controlling the trading volume through promises of profits to nominees, executing or directing matched orders, wash sales, or other prearranged trades, marking-the-close, and paying illegal kickbacks in exchange for purchases.


Jim Sinclair’s Commentary

How is your sense of humor?

Greenspan Concedes to `Flaw’ in His Market Ideology (Update2)
By Scott Lanman and Steve Matthews

Feb. 17 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said the U.S. may be doing too little to repair its financial system and promote an economic recovery.

President Barack Obama today signed into law a $787 billion economic stimulus package of tax cuts and increased spending. He has also pledged to use the bulk of the roughly $315 billion left in the bank bailout fund approved by Congress last October to revive the battered financial industry.

“The amount of money in both these pots may not be enough to solve the problem,” Greenspan said in an interview before a speech prepared for today to the Economic Club of New York.

The comments highlight the difficulties Obama faces in fighting the steepest recession in a generation. The economy contracted at an annual pace of 3.8 percent in the fourth quarter of last year, the most since 1982.

Greenspan, who now heads his own Washington-based consulting company, warned in his speech that the positive impact of the stimulus package on the economy will peter out if the U.S. fails to fix its financial system.



Jim Sinclair’s Commentary

Change is an elusive asset.

Obama Sends 17,000 Additional Soldiers to Afghanistan (Update3)
By Edwin Chen and Roger Runningen

Feb. 17 (Bloomberg) — President Barack Obama said the war in Afghanistan is “still winnable” as he signed an order increasing U.S. troops there by 17,000 combat and support personnel.

Military force alone cannot adequately deal with the threat posed by a “resurgent” Taliban, Obama said in an interview with Canadian Broadcasting Corp. The war is “still winnable — in the sense of our ability to ensure that it is not a launching pad for attacks against North America.”

Only a “comprehensive strategy” that also relies on diplomacy and development can halt the Taliban and the spread of extremism, the president said.

The announcement of the deployment marks Obama’s first significant decision on defense as he seeks to fulfill his campaign promise to shift the focus away from Iraq to Afghanistan as the central front on the battle against terrorists.


Jim Sinclair’s Commentary

The problems are legion. The solution simply does not and will not exist. Hyperinflation is the only way out.

Kan. suspends income tax refunds, may miss payroll

TOPEKA, Kan. (AP) — Kansas has suspended income tax refunds and may not be able to pay employees on time, state officials said Monday.

The state doesn’t have enough money in its main budget account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest borrowing $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and Republican leaders refused Monday.

Budget Director Duane Goossen said that without the money, he’s not sure the state can meet its payroll. About 42,000 state employees are scheduled to be paid again Friday.

He added that the state might also have to delay payments to public schools and to doctors who provide care to needy Kansas residents under the Medicaid program.

Goossen said the state stopped processing income tax refunds last week. Sebelius accused Republicans, who hold majorities in both chambers of the state legislature, of blocking the accounting maneuver to "play political games."



Jim Sinclair’s Commentary

If the OTC Derivative guys come for your house remember this article. It is very much for real. I hear the degree of record keeping has never met the volume of SIVs sold, which forms a secondary problem of severe potential ramifications. Basically, the paperwork is a total disaster. It was the subject of a special meeting called by the New York Fed which was presented for the purpose of handling back office problems.

Homeowners’ rallying cry: Produce the note
By MITCH STACY – 2 hours ago

ZEPHYRHILLS, Fla. (AP) — Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

"I’m going to hang on for dear life until they can prove to me it belongs to them," said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. "I’ll try everything I can because it’s all I have left."


Jim Sinclair’s Commentary

The slope we are on is the slipperiest in history. I am glad that I turn 68 next month.

Greenspan backs bank nationalisation
By Krishna Guha and Edward Luce in Washington
Published: February 18 2009 00:06 | Last updated: February 18 2009 00:06

The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman has told the Financial Times.

In an interview with the FT Mr Greenspan, who for decades was regarded as the high priest of laissez-faire capitalism, said nationalisation could be the least bad option left for policymakers.



Jim Sinclair’s Commentary

How smart they are!

China Feasts on Miners as ‘Bank of Last Resort,’ as Metal Falls
By Helen Yuan and Rebecca Keenan

Feb. 18 (Bloomberg) — Wuhan Iron & Steel Group and Jiangsu Shagang Group Co., China’s third- and fifth-largest steelmakers, are shopping for iron ore mining stakes in Australia and Brazil, executives said in interviews.

“We are evaluating and selecting” candidates in Australia and Brazil, said Shen Wenrong, Jiangsu-based Shagang’s chairman. “Going overseas is the government policy, so I believe we will get financing from Chinese banks.” Wuhan spokesman Bai Fang said his company is “looking for opportunities” amid lower acquisition costs for iron ore assets in Australia and “won’t rule out other countries.”

The world’s top metal user, China already has acquired $22 billion worth of commodity assets this year after a 70 percent drop in metal and oil since July ended a six-year boom in raw materials. With U.S. and Australian banks still hesitant to lend, Rio Tinto Group and OZ Minerals Ltd., laboring under combined debt of $40 billion, agreed this month to sell stakes to Aluminum Corp. of China and China Minmetals Corp., respectively.


Posted at 3:48 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

New all-time record highs were once again set in gold priced in both British Pound and in Euro terms at today’s London PM Fix. Gold priced in sterling terms came in 678.584 while euro priced gold was set at €766.976. It would appear that the former is making a run at 700 while the latter looks to be targeting €800. I have not yet had a chance to calculate the Canadian Dollar or Australian Dollar priced gold but it looks pretty certain that both of those have also set brand new all-time record highs as well. Meanwhile US Dollar priced gold hit a seven month high!

Fears concerning the former Soviet block countries of Eastern Europe were enough to send the Forex markets in convulsions overnight and into this morning with gold soaring upwards on fears of potential currency collapses in that region. Also, many European-based banks appear to be holding much of the debt of those nations and with default a real possibility, no one wants to own the Euro. The Dollar is winning by default (even the Yen got dumped this morning) but that is relative when you consider that it too continues to fall when measured against the gold price.

There was also further word out of Russia’s Central Bank that they intend to continue buying gold as part of their reserves in 2009. While the news was not particularly surprising, it did reinforce the notion that Central Banks are increasingly seen selling less and less gold moving forward. The market liked the news.

Meanwhile the stock market and the bond markets gave their vote on the Obama administration’s spending free for all, also known as the stimulus package. Stocks collapsed with the usual lemming-like response of a flight into the “safety” of Treasuries. Yep – those look mighty safe to me. Then again, they might make good kindling although I am sure the tree huggers would complain about burning all that paper.

Maybe bond buyers could add some of those California bonds to their portfolio. Those should be great performers considering that the state is $42 billion in the red. What a mess the politicians have made of the Golden State. To add some insult to the mix, the pols in Oregon are proposing at 1900% tax increase of a barrel of beer made in that state. Now Oregonians won’t even be able to afford a cold beer to help take their minds off of the mess that the country has become. Between Governor Schwarzenegger’s proposed tax on a round of golf, plus the beer tax, it looks to me like anything remotely resembling relaxation or recreation is going to end up becoming more like a luxury. I do not know which is worse, the fools that are elected to office or the people who voted them there. My advice to the young people out there is to plan a career either in meteorology or in politics. No matter how bad you mess up you always have job security. Barring that, become a US Marshall – you will stay quite busy entering the offices of financial entities as you seek to track down fraud.

Gold equities, aka, the mining shares, completely separated themselves from the stock selling orgy and shot strongly higher with both the HUI and the XAU pushing through last week’s highs. Technically many issues within this sector now have broken out on their weekly charts bettering the swing highs made late last year and look to be setting up strong trending moves. It is becoming obvious that gold is increasingly being viewed as one of the only true safe havens out there and many are looking seriously at the mining sector as a viable avenue of refuge from the economic storm.  That is proving to make life quite difficult for the perma shorts in the mining sector. The XAU is trading right in the proximity of the 50% retracement level from the March 2008 peak and the October 2008 low. Technically, this is a significant resistance barrier so if the index can push through this level and hold those gains for the rest of the month, it will qualify as solid technical breakout on the long term monthly chart especially since that level near 137 is also quite close to the 50 month moving average. Stay tuned.

Open interest in Comex gold futures dropped another 5500 contracts on Friday bringing the overall number down near the 355,000 level. It is nothing short of astonishing to see gold at current levels with the open interest so low. Part of the reason for the lower readings is the reduction in the spreaders category but even with that, the level is so low that it is difficult to envision a more positive set up from a market-internal perspective.

Gold deliveries were decent with Morgan and Goldman again taking the bulk of the gold. Over 300,000 ounces have been assigned so far this month with 2,193 positions remaining open in the expiring February contract.

Incidentally, the silver chart looks very, very impressive. The weekly continuous charts show it having run to the confluence of the 50 week and the 100 week moving average. Should it be able to close above those levels on Friday of this week, silver could ignite quite easily. I should also mention that oddly enough, both platinum and palladium were higher today with platinum especially strong. It just missed $1100. I find this noteworthy because heretofore both of these metals have been trading as industrial metals are have seen their price battered especially given the woes in the auto industry globally. To see them running higher today tells me that they have become recipients of safe haven flows and are also trading as precious metals. If silver, platinum and palladium are all rising together with such crappy economic news, investment demand is driving them higher and is more than sufficient to make up for any drop off in industrial demand.

Crude oil and natural gas are both significantly lower today as demand side bears are shoving them down  hard. Crude still remains above the low at the bottom of the recent trading range but it is sure looking vulnerable here to another leg down. Support is intact near $33 but a breach of that level and we could see crude prices below $30. I did not think that was possible. Natural gas too is hanging the low $4.00 range but it is conceivable that if the bottom does not hold, we could see a “3” handle on it soon.

Bonds – not much to say except the shorts got run out for  now. They are getting a safe haven bid but I would be surprised to see that last very long. Technically the bond bulls have pulled off quite a feat and managed to put in what looks like a short term bottom. How high they can push them remains to be seen however since the issue of supply is not going to go away.

Jack Bauer missed getting the bad guy last night, barely, and that is probably why we are down in the equity markets truth be told…

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


Posted at 12:14 AM (CST) by & filed under General Editorial.

Dear Friends,

To underscore my statement that "It has hit the fan," please review the following:

Forex failure continues in Poland
Posted by Izabella Kaminska on Feb 16 21:43.

It’s getting bleaker by the minute in Eastern Europe. In case you didn’t catch the latest from the Telegraph’s Ambrose Evans-Pritchard, he warned at the weekend how a growing crisis in Eastern Europe could cause nothing less than a total collapse in the West, or as he put it: “If one spark jumps across the euro zone line, we will have global systemic crisis within days.”

To make his point Evans-Pritchard quotes Morgan Stanley’s Stephen Jen on the fact that Eastern Europe has borrowed a total of $1,7oobn abroad. Furthermore about $400bn of that debt has to be rolled over this year – a number equivalent to about a third of the region’s GDP.

As we outlined a couple of weeks ago, the concern is now greatest not for the retail mortgage sector, which practiced the issuance of foreign-currency based mortgages on a grand scale, but for corporates — which it appears practiced the art of  derivative forex exposure on an even grander scale.

And so it comes as no surprise on Monday that yet another corporate forex failure has occurred in Poland, this time at Polski koncern Miesny Duda, a  Polish meatpacking business. The stock sank to a record low on the news. As Bloomberg reports:



An unwind is taking form right now, this minute, (9:10PM ET) that may or may not be contained by international Central Bank action.

Even if central Europe does not financially implode the world money system today, it is just around the corner.

There are so many risks threatening us now that survival of any monetary status quo is doubtful.

Protect yourself.

It has hit the fan, right now, and all that is thanks to OTC derivative manufacturers and distributors.

Respectfully yours,

Posted at 10:51 PM (CST) by & filed under Trader Dan Norcini.

Dear Friends,

While I appreciate the emails from those who write who are not clear on something and have asked for additional info to help them get a better grasp of something I have written, I must ask many of you to please refrain from sending me emails asking me to clarify something that Jim has written that they do not understand. Please direct those emails to Jim or to Editor Dan who can forward them on to Jim.

Also, to those of you who want to send me links to bulletin boards or chat rooms, asking me to respond to comments posted thereon, please refrain from doing so. My opinions are contained in that which I write and are on display for anyone who wants to read them. I have found over the years that a goodly number of the people who post in forums such as bulletin boards or various blogs have their own agenda, and will wrest whatever statements they find to advance that agenda. I have also found that attempting to keep up with such drivel is a huge waste of time and time is the most valuable commodity that we all have. Some seem to have nothing better to do with this commodity than to squander it; that is their business, but it is not mine.

Trader Dan

Posted at 7:01 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

"Pakistan unwound," in one of three uninvited, non- anticipated events that pushed a dire world economic situation into a maelstrom of geopolitical morass.

Basically, it is the last thing wanted at exactly the worst time possible.

Remember I am the messenger simply saying protect yourself, now in whatever form you can.

It has all hit the fan and there is no reverse.

Pakistan Govt, Islamists Sign Deal To Enforce Sharia-Minister
Last update: 2/16/2009 4:48:37 AM

PESHAWAR, Pakistan (AFP)–The Pakistan government and Islamic hard-liners on Monday signed an agreement to enforce Islamic Sharia law in the northwestern Swat valley, a provincial minister told reporters.

"Today an agreement has been signed between the government of NWFP (North West Frontier Province) and Maulana Soofi Mohammed," provincial information minister Mian Iftikhar Hussain told reporters.

"All laws against Sharia will be abolished, and Sharia will be enforced under this justice system," he added.

The agreement will cover Pakistan’s northwest Malakand area, which is one of the districts of NWFP and of which the troubled Swat valley is a part.


Jim Sinclair’s Commentary

Only pocket change for Madoff.

California Struggles to Close a Projected $41 Billion Deficit
Published: February 16, 2009

LOS ANGELES — The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently free of allies or influence — appears headed off the fiscal rails.

Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects.

After negotiating nonstop from Saturday afternoon until late Sunday night on a series of budget bills that would have closed a projected $41 billion deficit, state lawmakers failed to get enough votes to close the deal and adjourned. They returned to the capital late Monday morning only to adjourn until the afternoon, though it was far from clear whether they would be able to reach a deal.

California has also lost access to much of the credit markets, nearly unheard of among state municipal bond issuers. Recently, Standard & Poor’s downgraded the state’s bond rating to the lowest in the nation.



Jim Sinclair’s Commentary

This one moves slower and so far silently out of media focus, yet possesses within its totally impossible structure the seeds of the worst disaster of the entire economy, without historic precedent.

Government pension agency braces for recession
Little-known agency that insures pensions of 44 million workers braces for recession fallout
Deb Riechmann, Associated Press Writer
Monday February 16, 2009, 12:12 pm EST

WASHINGTON (AP) — The deepening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees.

The Pension Benefit Guaranty Corp. already has an $11 billion deficit that seems sure to grow larger as Corporate America suffers through the worst economic crisis since the Great Depression.

With companies reporting shortfalls in their pension funds, it’s all but certain that the PBGC will be forced to take over the pension plans of a rising number of bankrupt businesses.

That means more red ink at the corporation before things possibly can improve.

The future financial health of the agency is hard to forecast. It is hinged on interest rates, the length of the recession and the PBGC’s own luck in playing the market, where it has billions invested.


Jim Sinclair’s Commentary

Question: Hurry? Why?

Answer: Because it has all hit the fan! There is no reverse setting.

Geithner Pressed By G-7 to Move Faster on Bank Bailout (Update1)
By Simon Kennedy and Rebecca Christie

Bloomberg Feb. 16 (Bloomberg) — Finance chiefs from the Group of Seven nations joined the chorus of U.S. investors and lawmakers pushing Treasury Secretary Timothy Geithner to move faster to fix the banking system.

Stung by domestic criticism for failing to provide details last week on just how he plans to clean up banks’ toxic assets and revive lending, Geithner was told by foreign policy makers at weekend talks in Rome that speed was of the essence.

“A concrete U.S. plan would have positive spillover effects on markets and economies elsewhere,” said Marco Annunziata, chief economist at UniCredit MIB in London. “They are also probably hoping Geithner unveils the magic formula, which they could then also adopt.”

The G-7 finance ministers and central bankers want Geithner, 47, to tackle a U.S. credit crisis that lies at the heart of the worst global recession since World War II. Bank stocks, as measured by the Standard & Poor’s 500 Financials Index, have fallen 30 percent this year and ended last week lower than before Geithner presented his rescue plan on Feb. 10.



Jim Sinclair’s Commentary

The newest, best business in town is running a country with a Taliban presence.

Pakistan to Seek Additional $4.5 Billion IMF Loan (Update4)
By Khaleeq Ahmed and Khalid Qayum

Feb. 16 (Bloomberg) — Pakistan will seek a further $4.5 billion loan from the International Monetary Fund, warning that the country’s fight against terrorists is hurting the economy.

“We will ask the board of directors for the amount as the war on terror has caused serious economic problems,” Shaukat Tarin, the finance adviser to the prime minister, said yesterday in a telephone interview from Islamabad. The additional funds would boost the country’s total borrowing from the IMF to more than $12 billion, he said.

President Asif Ali Zardari is facing pressure from the U.S. to step up the fight against Taliban and al-Qaeda insurgents along the border with Afghanistan. The government forecasts the economy will grow at its slowest pace in seven years after raising interest rates as part of IMF conditions for a $7.6 billion loan in November.

“The government should seek aid from the U.S. and not loan from the IMF as compensation for fighting terrorists,” said Muzzammil Aslam, an economist at KASB Securities Ltd. in Karachi. “The IMF loan can only be used for balance of payments and building foreign reserves. Before asking for more loans, the government needs to say how it will pay back.”


Jim Sinclair’s Commentary

Do you recall a year or two ago I suggested you see the movie, "Enemy of the State"? The technology was real.

When outdoors, always look down unless you do not mind being on someone’s front page.

Click on this link and play with it….

Now think what is really out their tech-wise.


Jim Sinclair’s Commentary

Power in the hands of an office of Administration is rarely, if ever, released.

In Spy Case, Obama’s Justice Department Holds Fast to State Secrets Privilege — Update
By David Kravets February 13, 2009 | 1:29:51

The Obama administration is invoking the state secrets privilege for the second time this week, this time in a closely watched spy case weighing whether a U.S. president may bypass Congress and establish a program of eavesdropping on Americans without warrants.

The move, which the judge in the case rejected Friday afternoon, came days after U.S. Attorney General Eric Holder announced the department was reviewing all the litigation it inherited from the Bush administration in which the privilege was invoked.

Also this week, the Justice Department invoked the privilege before a federal appeals court to scuttle a case brought by five U.S. prisoners who claim the CIA was behind their kidnapping, which brought them overseas where they claim they were tortured. 

The litigation tactics underscore that, while the Obama administration has denounced many of the policies of the Bush administration, it has so far not changed litigation tactics in defending lawsuits challenging those policies.


Jim Sinclair’s Commentary

Murder and mayhem in markets causes murders and mayhem for real people. It is very personal when you are the injured.

First pension scheme files Madoff claim
Financial News (subscription) – London,England,UK
Separately, almost a quarter of institutional investors in hedge funds have less confidence in hedge funds as a result of market turbulence over the past 12 …