Posted at 3:22 PM (CST) by & filed under General Editorial.

Dear Friends,

Geithner proposed to the public a guarantee of value and fund for the purchase of the devil that caused all the problems – Toxic Paper.

Paper has caused this problem, not people, investment banks, the then Chairman of the Fed and the legislative as a whole.

Alf here comes TALF along with TARP and a good deal of spin and crap guaranteed to make your price objectives for gold absolute realities.

What I have suggested to you about this new no plan is absolutely correct.

Nine Points Of Logic And Reason
Posted: Feb 09 2009     By: Jim Sinclair      Post Edited: February 9, 2009 at 6:33 pm
Filed under: General Editorial

Dear CIGAs,

Nine points of logic and reason:

   1. This article is totally correct in saying nothing whatsoever has been done about the basic problem which is the failure of the OTC derivative. As long as the basic problem is not addressed by true valuation and bankruptcy of the friends of Washington all attempts to whitewash the disaster will in a short time wash away.

   2. The problem is how to value the failed OTC derivative properly because we can’t use the "zero" word.

   3. Because of #2 the US Treasury will guarantee a false value.

   4. Since the majority of SIVs will never perform due to bankruptcy in the asset chain, the US government will have to guarantee these at 100% of whatever value they intend to raise money on.

   5. Next, the US treasury will have to guarantee and/or provide 100% of the funds borrowed or raised to make this worthless unless guaranteed investment in a pile of miss-valued worthless SIV paper.

   6. Yielding the plan as it is now conceived is a useless camouflage of bankruptcy to be paid in via guarantee by the US taxpayer.

   7. We need no Bad Bank as we already have a really BAD one called the Federal Reserve. It is stuffed to its own bankruptcy level with all their financial pal’s OTC derivatives, also called toxic paper.

   8. The majority of dopes and all the financial media will praise this outstanding job of window dressing and whitewash painting as solid accomplishment at last.

   9. The media will have done a solid job instructing you that Toxic Paper is the villain, not those that manufactured the toxic paper OTC derivatives and distributed them, now having been bailed out 100% at your personal expense

This is all a Devil’s financial brew being moiled and boiled daily in hopes of keeping you all firmly intoxicated

Posted at 3:16 PM (CST) by & filed under Jim's Mailbox.


Pakistan making the guns…

This is a chilling reality of what we face as a Nation in Afghanistan.


Click here to view the video…

Dear Jim,

Mr. Armstrong is jailed. Before I accept his analysis give me some background on his problems.

Respectfully yours,
CIGA Dr. Bob

Dear Dr. Bob,

Armstrong was one of the three that in the 70s invented the OTC derivative of which three went to jail.

The OTC derivative structure then is no different from the OTC derivative structure out there today. No one is in jail.

His alleged contempt of court issue was because of a judge’s opinion he had funds hidden. As I understand it no client of his firm was harmed.

The basis of his problem is that many of the derivatives he created caused a tax credit.




The question being ask should not be when will this end but rather how bad will it get.


Click charts to enlarge

February109-Eric1 February109-Eric2

Posted at 3:10 PM (CST) by & filed under General Editorial.

My Dear Global Family,

You want to succeed in gold, life or anything? Listen to this calm situational awareness and risk analysis.

There is no room for emotions, just guts and professionalism.

Here is another exercise that I want you to do before you call to cry on my shoulder when it is wholly unnecessary.

By the way, in the 70s I single handedly ran the hell out of the Comex manipulators, breaking gold out and over every key pivot point repeatedly.

Where in hell is today’s Jim?

Now, damn it, listen to the lesson below on how to live in danger and stop being a bunch of pussies.


Posted at 5:10 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Now compare President Obama’s presentation in light of Mr. Armstrong’s article!

Obama: This isn’t your ‘run-of-the-mill recession’

(CNN) — President Obama appeared before a national audience Monday night to make the case for his economic stimulus plan, saying this is not your "run-of-the-mill recession."

The president stressed the urgency of passing the roughly $838 billion measure, which his administration and Democratic leaders say will help pull the U.S. economy out of its current skid.

"My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief," he said in his first prime time news conference.

Obama’s remarks came the day before the Senate votes on its version of the stimulus bill. The House passed its version of the stimulus bill nearly two weeks ago — without a single Republican vote. If the measure passes the Senate, the two chambers will have to reconcile the differences between the two bills.

Obama urged Congress "to act without delay," saying that only the federal government can break the "vicious cycle" gripping the U.S. economy.

"It is absolutely true that we cannot depend on government alone to create jobs or economic growth. That is and must be the role of the private sector," he said.


Posted at 12:46 AM (CST) by & filed under General Editorial.

Dear Friends,

Read this and you need not read any more ever, anywhere.

Save the file linked below. Each time you need me to hold your hand read this first. You will no longer need me.

I have in chapter and verse outlined to you what is coming and why.

This article is a maximus opus in line and verse, outlined in time and form and absolutely correct in content.

I met Mr. Armstrong in the early 80s. I know his story better than most. This is a man who has been persecuted for his knowledge. He is a modern day Livermore. Armstrong is the only true genius in finance. No one can qualify to tie his shoes.

He was incarcerated because of his talent by an all but now forgotten jurist. The why is forgotten. All that is remembered is someone’s belief he cost the IRS a large chunk of money.

Armstrong Economics:
The Coming Great Depression.
Why Government Is Powerless

It is frustrating to read so many comparisons of our current situation with 1929 while watching policy be set-in-motion to create spending on infrastructure. Everyone has their hand out looking for a bailout like a bunch of street burns pleading for money so they can get drunk or stay drunk. Almost nothing of what I have read is close to being accurate.  The scary part is depressions are inevitably caused by politicians who may be paving the road with good intentions, but are relying upon analysis so biased, we do not stand a chance.

The stock market by no means predicts the economy. A stock market crash does not cause a Depression. The Crash of 1903 was properly titled – “The Rich Man’s Panic.” What has always distinguished a recession from a Depression is the stock market drop may signal a recession, but the collapse in debt signals a Depression. This Depression was set in motion by (1) excessive leverage by the banks once more, but (2) the lifting of usury laws back in 1980 to fight inflation that opened the door to the highest consumer interest rates in thousands of years and shifted spending that created jobs into the banks as interest on things like credit cards.  As a percent of GDP, household debt doubled since 1980 making the banks rich and now the clear and present danger to our economic survival. A greater proportion of spending by the consumer that use to go to savings and creating jobs, goes to interest and that has undermined the ability to avoid a major economic melt-down.

The crisis in banking has distinguished depression from recession. The very term “Black Friday” comes from the Panic of 1869 when the mob was dragging bankers out of their offices and hanging them in New York. They had to send in troops to stop the riot. A banking collapse destroys the capital formation of a nation and that is what creates the Depression. The stock market is not the problem despite the fact it is visible and measurable and may decline 40%, 60% or even 89% like in 1929-32. But the stock market decline is normally measured in months (30-37) whereas the economic decline is measured in years (23-26). Beware of schizophrenic analysis that is often mutually contradictory or often antagonistic in part or in quality for far too often people think they have to offer a reason for every daily movement.

Our fate will not be determined by the stock market performance. Neither can we stimulate the economy by increasing spending on infrastructure any more than buying your wife a mink coat, will improve the grades of your child in school. We are facing a Depression that will last 23-26 years. The response of government is going to seal our fate because they cannot learn from the past and will make the same mistakes that every politician has made before them. Even if the Dow Industrials make new highs next week (impossible), the Depression is unstoppable with current models and tools.

Stocks & Consumers vs. Investment Banks

Let us set the record straight. The Stock Market is a mere reflection of the economy like looking at yourself in a mirror. It is not the economy and does not even provide a reliable forecasting tool of what is to come economically. We are headed into the debt tsunami that is of historical proportions unheard-of in history. There have been the big debt crisis incidents that have hobbled nations, toppled kings, and set in motion economic dark ages. It is so critical to understand the difference between the economy and the stock market, for unless you comprehend this basic and root distinction between the two, survival may be impossible.

To the left I have provided the Economic Confidence Model for the immediate decline. You will notice I did not call this the “stock market model” nor a model for gold, oil, or commodities. I used the word “economic” with distinct and clear purpose. I have stressed it does not forecast the fate, of a particular market or even a particular economy. It is the global economic cycle some may call even a business cycle. Please note that what does line-up and peaks precisely with this model often even to the specific day that was calculated decades advance is the area of primary focus. Yet the US stock market reached a high precisely with this model and then rallied to a new high price 8.6 months later. In Japan, the NIKKEI 225 peaked precisely on February 26th, 2007. This is not a very good omen. But there was something profound that turned down with the February 27th, 2007 target – the S&P Case-Shiller index of housing prices in 20 cities. February 2007 was the peak for this cycle in the debt markets – not the US stock market.

The stock market always bottoms in advance of the economic low. In fact, we will see new highs in the now even in the middle of a Great Depression. At least the 1929 cycle was more of a bubble top in stocks than what we have in place currently in the US stock market.  We still had the bubble top in the NASDAQ back in 2000, but this illustrates the point. There was a major explosive speculative boom. The bubble burst in 2000 and there was a moderate investment recession into 2002, but there was no appreciable economic decline that was set in motion because of that crash. Currently, we have a major high in 2007, but it was not a bubble top because it was not the focus of speculation. The real concentration of capital that created the bubble top, took place in the debt markets. This is the origin of the economic depression – not stocks and not the displacement of farmers because of a 7 year drought created by the Dust Bowl that invoked the response of the Works Progress Administration (WPA) in 1935. Keep in mind the stock market bottomed in the mid summer of 1932 when unemployment was not excessive from a historical perspective. The 25% level of unemployment came after the major 1932 stock market low that was followed by both the banking crisis after the election of FDR and before his fateful inauguration. The Banking Crisis came about because of rumors that Roosevelt was going to confiscate gold. Herbert Hoover published his memoirs showing letters written to Roosevelt pleading with him to make a statement that the rumors were false. He did not.


Posted at 6:12 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Nine points of logic and reason:

  1. This article is totally correct in saying nothing whatsoever has been done about the basic problem which is the failure of the OTC derivative. As long as the basic problem is not addressed by true valuation and bankruptcy of the friends of Washington all attempts to whitewash the disaster will in a short time wash away.
  2. The problem is how to value the failed OTC derivative properly because we can’t use the "zero" word.
  3. Because of #2 the US Treasury will guarantee a false value.
  4. Since the majority of SIVs will never perform due to bankruptcy in the asset chain, the US government will have to guarantee these at 100% of whatever value they intend to raise money on.
  5. Next, the US treasury will have to guarantee and/or provide 100% of the funds borrowed or raised to make this worthless unless guaranteed investment in a pile of miss-valued worthless SIV paper.
  6. Yielding the plan as it is now conceived is a useless camouflage of bankruptcy to be paid in via guarantee by the US taxpayer.
  7. We need no Bad Bank as we already have a really BAD one called the Federal Reserve. It is stuffed to its own bankruptcy level with all their financial pal’s OTC derivatives, also called toxic paper.
  8. The majority of dopes and all the financial media will praise this outstanding job of window dressing and whitewash painting as solid accomplishment at last.
  9. The media will have done a solid job instructing you that Toxic Paper is the villain, not those that manufactured the toxic paper OTC derivatives and distributed them, now having been bailed out 100% at your personal expense

This is all a Devil’s financial brew being moiled and boiled daily in hopes of keeping you all firmly intoxicated.

Geithner to Draw Private Funds to Address Toxic Debt

Feb. 9 (Bloomberg) — Treasury Secretary Timothy Geithner is seeking to draw investors into the U.S. financial-rescue program, aiming to add private funding as a new component of proposals to address the toxic debt clogging banks’ balance sheets.

Aides worked through the weekend to complete the package that Geithner will announce tomorrow in Washington, which was delayed by a day. Aspects of the plan that have been settled include a new round of injections of taxpayer funds into banks, targeted at those identified by regulators as most in need of new capital, people briefed on the matter said.

The toughest issue has been the one Geithner’s predecessor failed to address: the illiquid assets that caused the credit crunch. A leading proposal is a so-called aggregator bank, featuring investors such as hedge funds and private equity, that may issue Federal Deposit Insurance Corp.-backed debt, the people said. It’s unclear how big a role there’ll be for guarantees of securities that stay on banks’ balance sheets.

“We have to reach a point where investors and consumers have greater confidence in our financial system,” Philadelphia Federal Reserve Bank President Charles Plosser said in an interview. “Without that, these institutions will not be able to attract new capital or be able to fully resume their important role in providing credit.”

Stocks flucuated, with the Standard & Poor’s 500 Stock Index rising 0.5 percent to 873.20 at 1:03 p.m. in New York. Treasuries slid, pushing 10-year note yields up to 3.05 percent from 2.99 percent.



Rep. Kanjorski: $550 Billion Disappeared in "Electronic Run On the Banks"

At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occured over the period of an hour or two.

Here is a transcript of what Kanjorski says:


Posted at 4:55 PM (CST) by & filed under In The News.

Dear Friends,

Gold is going to $1650 and that is for starters.

The US dollar is going to .6200 and then .5100.

The Safe Haven Dollar is as stupid now as the Goldilocks Economy and rear view mirror economic events were.

I am getting calls from people who either don’t read or should only be in US dollar treasury bills.

My leash is getting tight so please read JSMineset first. Email me if you do not understand something and if it was ill presented, it will be corrected. Do not call me and ask me if I have changed my mind since I posted something this morning. Remaining polite is becoming hard.

The following amount of money can:

1. Pay off every mortgage in the USA.
2. Send a check for $1400 to ever person on this planet.

Hyperinflation cannot be avoided.

Respectfully yours,

U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
By Mark Pittman and Bob Ivry

Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.

Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.

“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”



Jim Sinclair’s Commentary

And finally for this evening a word from Bloomberg for the all the Pollyanna’s out there.

Bank Failures May Reach 1,000 on Bad Loans, RBC Says (Update2)
By David Mildenberg and Margaret Chadbourn

Feb. 9 (Bloomberg) — As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the height of the saving-and-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets analysts said.

Most of the failures will probably occur at banks with less than $2 billion in assets as their commercial customers default, said Gerard Cassidy, an analyst at RBC, in an interview today.

“There are billions of dollars of losses embedded in the system, and the system has to flush them out,” Cassidy said. “The people that are going to take the losses are the taxpayers and bank stockholders, and if regulators say there won’t be much loss to taxpayers, they will be lying.”

Regulators are taking steps to help lenders avoid losses as President Barack Obama’s administration readies a rescue package that may include guarantees for toxic assets, according to people familiar with the plan. The Federal Deposit Insurance Corp. closed nine banks so far this year after shutting 25 in 2008 and identified 171 “problem” institutions as of the third quarter.

The FDIC has already raised the estimate for the cost of U.S. bank failures through 2013 after fourth-quarter financial reports from banks signaled possible additional losses to the deposit insurance fund. The agency said failures through 2013 may cost more than the $40 billion estimated in October.


Jim Sinclair’s Commentary

What, me worry? If I’m not why would you?


Jim Sinclair’s Commentary

Here is a neat approach. The Fed buys its own paper in amounts in excess of what it issues thereby financing itself and no longer requiring China’s help.

The catch is that the value of the US government would head for the floor as rates went through the roof because there are too many treasuries already out there.

How damn stupid can a central bank be? To the degree they buy their own paper they depreciate the paper already out there. Have you ever seen a stock buyback stop a bear market in the buyback company? All a stock buyback ever does is to allow the insider a firm bid to sell into.

If the Fed does what amounts to a buyback is China the seller?

Fed Lacks Consensus on Treasuries as Yields Rise
By Scott Lanman and Craig Torres

Feb. 9 (Bloomberg) — Federal Reserve officials have failed to resolve an internal debate over whether to purchase long-term Treasuries, even as rising yields on the securities threaten to undermine the central bank’s objective of cutting borrowing costs for consumers and businesses

Policy makers are instead focusing on a program to purchase $200 billion in consumer and small-business loans and on a plan to buy $600 billion in home-finance debt, according to people familiar with the deliberations.

Forgoing purchases of Treasuries may exacerbate a jump in borrowing costs for the government as federal debt managers seek to finance an unprecedented budget deficit. Benchmark 10-year note yields this week exceeded their level of Dec. 1, when Fed Chairman Ben S. Bernanke first talked about the option. That’s raised other borrowing costs, potentially delaying a recovery.

“The Fed will get a lot more bang for its buck by buying mortgages than buying Treasuries,” said John Ryding, founder and chief economist of RDQ Economics LLC in New York and a former Fed economist. “We were kind of a little surprised when the Fed wanted to go down this route” in comments starting in December, Ryding said.


Jim Sinclair’s Commentary

Hello, I am from the Federal Government here to help you.

GM, Chrysler May Face Bankruptcy to Protect U.S. Debt (Update3)
By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) — General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

“They are negotiating to see if they can reach an agreement,” said Workman, a bankruptcy lawyer based in Washington. “If not, they are saying ‘We are pretty darn sure that a bankruptcy judge will allow us’” to be first in line for repayment.


Jim Sinclair’s Commentary

Here is an FYI from CIGA Jesse. Maybe GM deserves to go broke?

General Motors to Invest $1 Billion in Brazil Operations — Money to Come from U.S. Rescue Program
By Russ Dallen
SAO PAULO — General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn’t be logical to withdraw the investment from where we’re growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company’s revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil’s automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.



Jim Sinclair’s Commentary

Let the truth be known!

You know all these car company got the major axe, not from bad business, but first from the use of OTC derivatives by their credit arm which in turn killed business.

If you cannot borrow money to buy a car, no cars are bought!

Nissan to Cut 20,000 Jobs as Carmaker Forecasts Loss (Update3)
By Makiko Kitamura

Feb. 9 (Bloomberg) — Nissan Motor Co., Japan’s third- largest automaker, said it will slash 20,000 jobs and post its first loss in nine years as the global recession cripples car demand and a stronger yen ravages the value of overseas earnings.

The company expects a net loss of 265 billion yen ($2.91 billion) for the year ending March 31, compared with its October estimate of 160 billion yen in net income. It also scrapped its second-half dividend.

Nissan’s sales in the U.S., its biggest market, plunged 31 percent in January as demand for Altima sedans and Xterra sport- utility vehicles dried up. Chief Executive Officer Carlos Ghosn’s elimination of 9 percent of the workforce caps a month in which all of Japan’s carmakers slashed forecasts and Panasonic Corp. and NEC Corp. cut workers.

“The economic storm is wreaking havoc on everyone,” said Yuuki Sakurai general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. “Things could get even worse.”


Jim Sinclair’s Commentary

It is so stupid as not to be stupid.

Money given to Pakistan for any reason goes to them for one reason and into very few pockets.

Damn, country leadership can be a great private enterprise.

Police injured in Pakistan attack
BBC News – UK
A suicide bomber has driven a car loaded with explosives into a police check post in north-western Pakistan, injuring at least 15 policemen.
See all stories on this topic

Video Is Said to Be Polish Hostage’s Beheading in Pakistan
New York Times – United States
By AP DERA ISMAIL KHAN, Pakistan (AP) — A graphic video delivered to reporters on Sunday appeared to show the execution of a Polish engineer by Pakistani
See all stories on this topic

Tougher on Pakistan
News & Observer – Raleigh,NC,USA
27 news article "Taliban clamp down in Swat" suggested the need for new US foreign policy toward Pakistan. US policy undermined India’s democracy and
See all stories on this topic

Losing Hearts and Minds in Pakistan
Washington Post – United States
President Asif Ali Zardari gave a frank assessment of the challenges that Pakistanfaces, as well as outlining the need for US support in improving
See all stories on this topic

Pakistan to Present Mumbai Probe Report to Committee, Geo Says
Bloomberg – USA
9 (Bloomberg) — Pakistan has completed its investigation into the Mumbai attacks and will submit its report to a defense committee today, GEO television
See all stories on this topic

US Skeptical About Pakistan’s Restrictions on Nuclear Scientist
Washington Post – United States
Pakistan has "given us some initial commitments but we’re going to be following [the situation] very closely. The important thing is that they know we are
See all stories on this topic

Pakistan Vows to Monitor Scientist
New York Times – United States
Mr. Khan is a hero in Pakistan for developing the country’s nuclear program, and many claimed the Zardari government was detaining him at the behest of
See all stories on this topic

Nuclear Scientist Khan Isn’t Threat, Pakistani Minister Says
Bloomberg – USA
8 (Bloomberg) — Pakistan will ensure that nuclear scientist Abdul Qadeer Khan doesn’t resume selling atomic technology to other countries after his release
See all stories on this topic

Pakistan enjoys world support against Indian ‘designs’: Gilani
Daily Times – Lahore,Pakistan
Gilani described reported Indian plans to get Pakistan declared a ‘terrorist state’ as wishful thinking, and said Pakistan’s diplomacy and foreign policy
See all stories on this topic

US envoy Holbrooke to reach in Pakistan today
Times of India – India
MUNICH: US special envoy Richard Holbrooke will arrive in Pakistan on a two-day visit on Monday, Geo TV reported. He will hold separate meetings with
See all stories on this topic

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

Dear CIGAs,

As stated many times on this page, trying to come up with explanations that detail the price movements of the Comex gold market day in and day out has become a fruitless task. The Dollar goes up, gold goes down. Oops- I mean the Dollar goes down, gold goes down. The stock market goes up,  gold goes up as risk comes back in. Oops – I mean the stock market goes up, gold goes down. Crude oil goes down, gold goes down. Oops – I mean crude oil goes up and gold goes down.

The point is simple – we continue to watch a market that is not a free one and therefore analysts who are frequently quoted by the wire service writers who always are looking for sources to quote, have no idea how to explain the gyrations in the Comex gold market. I would much rather have someone who is honest instead of pretending to be some sort of omniscient wizard who has a cosmic connection to the Comex gold market and unfailingly knows beforehand exactly what it will do on any given day and why. Then again our government is currently filled with such people so what can we expect.

Here’s a clue to the clueless analysts – just look at the CFTC commitment of traders reports – that is all you need to know to explain the price action in paper gold. Last Friday’s report showed what we who have been following this market since the bull move began in 2001 – all of the selling pressure in the Comex gold market has been coming from the commercial side as usual and that selling is concentrated in the bullion banks who continue to pull this flim-flam scheme and sucker the hedge fund managers who refuse to get in the war.

I was watching the wonderfully done War Between the States’ movie, “Gods and Generals” last evening. It detailed the early years of the war 1861-1863 and focused a great deal on the battle of Manassas, Fredericksburg and Chancellorville and particularly one of my heroes, Confederate General Thomas “Stonewall” Jackson. What I find so admirable about Jackson was his intuitive grasp of the battlefield and how quickly he was able to adjust to changing conditions and anticipate the movement of the Federalists forces. He ran rings around the Union generals and even with a smaller force was able to pull off victory after victory because of his tactical skills and his ability to maneuver his men bringing them to bear on the battlefield at exactly the right time and the right place to achieve maximum effect. He was a fearless, pious, killer who despised the Yankee invaders.

To make an analogy – the bullion banks are the Federalist forces, numerous in the sense of being well-supplied,  but the hedge funds, instead of being led by skillful tacticians who insist on victory and possess a killing instinct,  are instead led by inept idiots who insist on marching right into the fortified positions of their enemy expecting to be able to drive them out  from behind their redoubts and who refuse to change their tactics and adapt even when they achieve the same results time and time again, namely defeat. The delivery intentions for the February contract for today showed again a big ZERO when it came to longs standing for delivery. Yes, that is a ZERO, NADA, NOTHING, NOT ONE OUNCE, of real physical gold was demanded by the longs but particularly by the hedge funds who will die in their ranks before actually doing something tactically brilliant and forcing the enemy to come out of his entrenched fortifications and search for actual gold to deliver to aggressive longs who mean business and are intent on destroying their enemy for good. Might as well fire wadding at the enemy instead of lead….slingshots against rifles…

Tip to hedge fund managers – go over and look at what some of your brethren did in the grain markets which forced the CBOT to take action to limit the amount of grain delivery receipts…

The results are predictable – gold stalled out as the bullion banks simply sold more paper gold and absorbed all the bids. The longs ran and once again the bullion banks plundered the damn fools. For the sake of our readers, that is why Jim and I have constantly cautioned those who want to trade the paper market, not to chase the price of gold higher but to buy it only on weakness and sell it into strength when it becomes obvious that the capping move is in play. Do not follow the lead of the hedge funds – if they are going to play the part of the fool, let them do your work for you and make money off of their ignorance. Fade them….

See the chart for the technical support levels now that gold has rolled over. $880 is back in play should today’s low not be able to hold.

The XAU looked as if it might be on verge of a breakout last Friday as it managed the best close since October 2008. It could not generate any upside follow through in today’s session however.

The Dollar was down against every single major today – even against the Yen. The commodity currencies continue moving higher and that is something that has major implications for the entire commodity world. It also shows that “risk” is back in meaning the safe haven bid for the dollar has faded which is why gold is supposedly going back down. I will remind that brilliant commentators who told us this when gold goes down when the “risk is out” mentality comes back once again.

The grains are higher today with crude oil and natural gas higher also. Copper was taken lower alongside of silver as there remains some uncertainty in that market over what the Chinese are actually doing. Platinum was knocked lower on news of Nissan job cuts as it served to reinforce how bad things are in the automotive industry worldwide right now. Palladium followed platinum lower.

Something that is happening to the bonds that I think is quite significant – they have broken down below the 100 day moving average with every one of the major moving averages that I track now having turned decidedly down. There is a bit of support near the 123^00 level but frankly, it is not much. The 200 day moving average, a huge area from a technical perspective, is down near the 120 ^28 region. If bonds were to break down below that, I think the Fed would either have to move in and begin buying up the long end of the curve or face a crippling rise in the interest rates. It appears that the porkulus bill coming out of Washington has bond traders rightfully anticipating a tidal wave of supply which will be far too massive for current demand to absorb. People are wondering whether or not the bond market bubble has popped – guess what – it has. Bond traders might just now be attempting to draw out the Fed and see if they will make good on their prattle about actually buying bonds to force down interest rates. Speculators and monetary authorities have this understanding… the monetary authorities make noises and the specs test them to see if there is anything of substance behind their bluster.

Tomorrow is another day – who knows what we can expect to see.

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