My Dearest Friends,

We are in a storm of verbal intervention where the US dollar is concerned. Everything from statements that cannot be based on data such as the US dollar is "the mother of all carry trades," to the warnings to the East by Western Central banks not to apply currency controls as they are ineffective, to the Maginot Line drawn in the sand in the Euro at $1.50, are all structured to slow down the decline of the US dollar at a critical point in its descent.

On the other side of the coin the fundamentals for the dollar are not supportive.

All the moves towards currency diversification by central banks remain in place. Many central banks and Vietnam by increasing its importing of gold are following in the footsteps of India and China.

There is no question that there are governmental stops in the price of gold. If you read Armstrong’s conviction last evening, you know about the effects of imports and the ongoing long-term problems in the housing market and financial sectors that render no fundamental support for the dollar.

As the dollar makes it’s way below key levels already outlined to you and gold moves toward $1650 and beyond, there will be times like now where the advice of top callers seems rational, but is not.

I do not address my comments to those seeking a tip sheet or who are traders. I see that as contra-productive in the gold field now.

Understanding what is happening in complex currency trades, the impact of imports/export, and the financial industry that is now able to mark up toxic paper at will is not easy.

We have traveled together from $248 to the present level.

Those who have been here from the beginning will recall that when gold passed $529.40 it entered into a runaway and trading was suggested only for professionals.

I would like to reiterate that it is only going to get harder between here and $1650 and after on the way to Alf and Armstrong’s numbers. Swings can be hundreds of dollars from high to low in single days.

Look at this as insurance unavailable anywhere else.

Treat gold like the insurance policy it is with your gold and gold related item cost being the cost of the arrangement.

Ask yourself if you are succumbing to a top caller if you really want to be long dollars for any appreciable period of time.

Do not be run ragged by algorithm and hedge fund trading. Carry markets can be extremely violent.

Look at CIT and Middle America. Look at unemployment, and do not succumb to the new normal in a depraved economic world.

Have courage because you are going to need more than you already have called upon.

I am here for you to the absolute ability of one man communicating. Speculate if you must, but don’t call me when you hit the fan.

For those that understand the insurance character of gold, stand strong and stay the course.

Respectfully yours,
Jim

Jim Sinclair’s Commentary

One of today’s examples of verbal currency market intervention:

"European Central Bank President Jean-Claude Trichet said the ECB will gradually withdraw emergency cash."

Jim Sinclair’s Commentary

The man puts his money where is confidence lies.

Paulson: Gold’s Bull Run Is Just Beginning
November 19, 2009
By Simon Avery

John Paulson, lionized by many investors for his winning bet on the fall of the housing and financial markets, is now getting aboard the gold wagon.

The hedge fund manager told his investors that even at $1,150 an ounce, the bull run on gold is just beginning, according to the Wall Street Journal.

His firm, Paulson & Co., plans to launch a fund January 1st dedicated to gold mining shares and other bullion related investments, the newspaper reported.

Mr. Paulson, who is estimated to be worth about $6 billion. His bet against real estate and banks between 2007 and 2009 reportedly netted his hedge fund about $20 billion.

On Thursday, the World Gold Council reported that demand for the precious metal increased 10% in the third quarter from the previous three month period, driven by investors looking for a currency hedge and more jewelery purchases.

More…

Jim Sinclair’s Commentary

Shocking and hard to believe, but real.

Do you want gold as insurance or the dollar long-term?

$4.8 trillion – Interest on U.S. debt
Unless lawmakers make big changes, the interest Americans will have to pay to keep the country running over the next decade will reach unheard of levels.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: November 19, 2009: 1:05 PM ET

NEW YORK (CNNMoney.com) — Here’s a new way to think about the U.S. government’s epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.

More than half. In fact, $4.8 trillion.

If that’s hard to grasp, here’s another way to look at why that’s a problem.

In 2015 alone, the estimated interest due – $533 billion – is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

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Jim Sinclair’s Commentary

This has to do with internal currency related demand and is not a central bank purchase.

Vietnam to import 6 tonnes gold this month -State TV
Thu Nov 19, 2009 12:52am EST

HANOI, Nov 19 (Reuters) – Vietnam will import 6 tonnes of gold this month, state broadcaster VTV said on Thursday, after the central bank last week lifted a ban on imports to stabilise an overheating market.

So far, 1.5 tonnes had been imported, 500 kg each by Sacombank STB.HM, ACB ACB.NM and Eximbank EIB.HM.

Saigon Jewellery Corp (SJC) will import 1 tonne, and 500 kg being imported by Agribank Jewellery Company will arrive in a few days, the VTV 1 Financial bulletin said. (Reporting by Nguyen Nhat Lam and John Ruwitch

More…

Jim Sinclair’s Commentary

Things are happening faster than anyone anticipated.

The fabric of social order is under attack. The sheeple sleep on.

Oct. SSTF Report – We Are Now Living Off Of The Interest
Submitted by Bruce Krasting on 11/18/2009 09:02 -0500

The Social Security Trust Fund wracked up another monthly deficit for October. The shortfall was $4.2 billion. This is the 5th consecutive month of red ink for the Fund. The total for the period comes to $15bil. Blame the economy and the boomers for this problem. Some basic measures of the Fund’s performance are rapidly deteriorating.

A critical measure is the ratio of Payroll Tax receipts to Benefits paid. The following chart looks at that ratio over time. That ratio will fall below 1.0 for the full year 2009. As of today we are living off of the interest.

In November the SSTF will pay out $56.9 billion. They will be lucky to take in $47 billion in tax income. The deficit will be near to $10 billion. Interest income, and other income add another $140b annually to the Fund’s top line. But with monthly deficits of $10b on an operating basis, the Fund is running very close to break even for 2010. That possibility is not on anyone’s radar screen.

My estimate for benefits in 2010 is $756 b. If we assume total GDP growth of 2% the resulting ratio is 5.75%. That is up from 4% just a few years ago. It is rising fast. The following is from a CBO report on the Fund from August 2009. These guys think it going to 6% in 2030? This train will arrive 18 years early.

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Jim Sinclair’s Commentary

This is the new normal. How is this a foundation upon which an economic recovery can be firmly based?

Foreclosures will keep rising through 2010, report says
Mortgage Bankers Assn. says delinquencies and home repossessions have hit a new high. Blaming job losses for most of the pain, it sees a continued surge in foreclosures through all of next year.
By E. Scott Reckard
November 20, 2009

Home foreclosures are likely to keep climbing through all of next year despite stabilizing housing prices in some areas, a major lender group said Thursday as it reported that the level of delinquencies and repossessed homes had jumped to a record.

One in seven U.S. home loans was past due or in foreclosure as of Sept. 30, putting that quarterly delinquency measure at its highest level since 1972, when the Mortgage Bankers Assn. began reporting it. At the beginning of this year, 1 in 10 loans was past due or in foreclosure.

The continued surge in delinquencies suggests that a recovery in the housing market could be stalled by the worsening job picture as well as by further fallout from the easy-money lending that prevailed during the boom years.

Signals about housing have been decidedly mixed. On the bright side, median home prices appear to have stabilized — for the time being, anyway — in hard-hit areas of California such as the Inland Empire, and have begun to inch up again in San Diego and Orange counties and in San Francisco.

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Jim Sinclair’s Commentary

It is hard to navigate between the rogue waves of MOPE, but here is a stark reality. Mortgage backed securities are OTC derivatives.

Fed has biggest balance sheet since December.
The Fed’s balance sheet swelled to its largest point since December as its holdings in agency and mortgage-backed securities increased, data released Thursday showed. Balance sheet liabilities had expanded to $2.19T as of Nov. 19, the highest point recorded since liabilities hit $2.25T on Dec. 31, 2008. The Fed’s holdings of mortgage-backed securities increased to $847B, from $776B a week earlier, while its agency debt ownership rose to $153B from $150B. The Fed has said it will continue its support for markets with ongoing purchases of securities, buying $1.25T worth of mortgage-backed securities and $175B in bonds issued by Fannie Mae ( FNM), Freddie Mac (FRE) and the Federal Home Loan Bank System.

Jim Sinclair’s Commentary

Pakistan today.

Why Pakistan Won’t Fight the Afghan Taliban
By OMAR WARAICH / ISLAMABAD Friday, Nov. 20, 2009

President Barack Obama is about to announce his new strategy for Afghanistan, but the success of whatever option he chooses will depend heavily on Pakistan acting to stop its territory being used to attack Western forces next door. And that’s bad news, because the demands of its own domestic counterinsurgency campaign, doubts about the duration of U.S. commitment in Afghanistan and looming political instability in Islamabad have left Pakistan in no hurry to help out.

Obama’s National Security Adviser General James Jones last week visited Islamabad carrying a message from his boss to Pakistan’s President Asif Ali Zardari. The New York Times reported Monday that in the letter, Obama urged Zardari to rally his nation behind a joint campaign against militants who fight the Pakistani government and those who fight U.S. and allied troops in Afghanistan. Obama was also reported to have demanded more decisive action against al-Qaeda leaders hiding in Pakistan’s tribal areas. In return, he reportedly offered a range of fresh incentives, "including enhanced intelligence sharing and military cooperation."

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Dear Jim,

It looks like the UK is in the grip of your Formula too!!!

Best,
BT

OECD warns Britain risks ‘debt spiral’
Britain is at growing risk of a "public debt spiral" unless the Government takes "drastic" action to cut the deficit, according to the OECD, world’s leading economic institution.
By Edmund Conway
Published: 6:35PM GMT 19 Nov 2009

The Organisation for Economic Co-operation and Development said that even if Britain reduces its deficit in line with other leading nations, it will still have the rich world’s biggest deficit from now until 2017 and potentially beyond, casting serious doubt on its economic credibility.

The warning coincided with shock public finance statistics showing that public borrowing in October was 88 times what it was in the same month last year, making it likely that the Chancellor will miss his £175bn borrowing forecast this year.

The double blow is acutely embarrassing for Downing Street, coming ahead of next month’s pre-Budget report and only 24 hours after it pledged to create a Bill to halve the deficit within four years and to reduce debt every year for the coming decade.

In fact, the OECD predicted in its annual Economic Outlook, Britain’s deficit was likely to be even higher next year than this year, at 13.3pc, raising the prospect that the Government could break its own law in its very first year.

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Dear CIGAs,

The chart below depicts the balance at the Federal Reserve of its Custodial Accounts, which for some of our new readers, is basically the US debt holdings of Foreign Central Banks around the world. As such, it is a good way to gauge the relative indebtedness of the US.

I have been constructing this chart every week now for many years and each week I look at it and post the new data, I have to sigh in despair at what is portends for my children. Our nation is hopelessly bankrupt for all practical purposes as there is no way under heaven that a debt of this magnitude will ever be repaid in its entirety unless of course the currency in which the debt is denominated is deliberately debauched and drops precipitously in value. This is precisely what China is angry about, and I might add, rightfully so.

For the Chinese to go out of their way to formally rebuke the US ruling elites and monetary officials about the commodity bubble that is occurring courtesy of the collapsing US Dollar, is quite remarkable given their penchant for etiquette and tact. One can easily discern just how irritated not only China, but all of Asia is with the US. At some point, this tension is going to erupt in a much larger way. Heaven help us all when it does because it will be marked by a period of soaring interest rates as a buyer’s strike occurs in the US Treasury market.

The middle class will be the victims in all of this as the find themselves unable to keep up with the rapid increases in the cost of living.

Click chart to enlarge in PDF format

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

Dear CIGAs,

CIGA Bruce (below) says stop watching. Gold is going to a minimum of $1650.

Jim Sinclair’s Commentary

The following article by Armstrong presents conclusions based on fact, not opinion. It makes present time comparisons that must draw your attention to the equity markets in the Weimar experience.

It helps explain the increasing prices of goods and materials in a period of at best modest demand. It refers to the large currency exiting from the US, which may well have to do, among others things, with those huge profits made since April of 2009 by the financial industry.

It is a thesis, as I see it, for Martin Armstrong’s courage to state, at risk to all he has, his reputation in markets, the conclusion that gold is going to $5000.

It explains the stair step that Trader Dan has been outlining for us. This is a time for data, not opinions as opinions lead to confusion. Data leads to actionable conclusions.

It is more foundation for me to say gold will trade at $1224, $1278, $1650 and then of to Alf and Armstrong’s numbers.

Conclusions most recently from Martin Armstrong concerning the trend of dollar outflows:

“ What we must do is dissect the whole economic structure and study HOW it works in order to understand the solutions. We cannot proceed just on OPINIONS. Where’s the proof? Where’s the study? Where is the evidence of what you say is correct?

What has taken place over the years post World War Two is that the concentration of wealth in the United States caused a false sense of invincibility. The housing market had a good run. From roughly the 1955 period, we have seen about a 52-year rally into 2007. It appears we may have reached a major high in real estate and this is of great concern. For if this is the case, then what in fact we are actually looking at is a serious contraction in what people believe has been their long term Piggy Bank.

This trend is converging with the retirement of the baby boomers. It is also converging with the securitization of real estate pools that created the 2007 high in February. This combines even still with the dangerous problem we have of the debt that is also starting to implode on a STATE and NATIONAL basis.

Effectively, because we are not the financial capital of the world as we were in the 1930s, the trend that emerges will be different as well. When capital was fleeing Europe and rushed to the dollar driving that up in price so that we then turned to protectionism, the opposite is now taking place whereas the dollar is falling as capital is fleeing, so if we see anything, the high degree of imports will be inflationary in the US, not deflationary.

With the banking system still in deep denial and capital beginning to show signs of caution shortening its maturity even in sovereign debt, the long-term horizon will also collapse. The more difficult it becomes to fund long term, the greater the deflationary effect will be in housing. Never the less, this will not (deflation) be any national trend.

What we have is an inflation pressure in other sectors that we will see manifested in stocks and commodities. It is the real estate that is still leveraged and will take a serious impact upon exclusively real estate. If funds are not available to provide long-term mortgages, then the prices in this sector will continue to fall. That is not the same fate that is shares by the rest of the financial world.

It is the lack of liquidity in the real estate market that is the problem. Prices reflect the ability to borrow 30 years of future income. As that contract, prices collapse.

We do not have that of leverage in stocks and commodities.

Consequently, The future that lies ahead is not as easy as most would want you to think. The core interrelationships will shift and change. We are facing a serious problem with the real estate sector as a whole, and this will be reflected again in the second phase of the major crash that began 2007.15 precisely to the day. The banking crisis is not over either. As this turmoil brews you will see every fundamental idea of how market function will be laid bare on the sidewalk of ruin. This is not the time for opinions. This is time for serious work."

Jim Sinclair’s Commentary

Along with Trader Dan’s presentation of US international debt, consider this fact as a reason why $1650 may well be wrong and $5000 be right.

Chinese consumers embrace gold
By Chris Flood , Financial Times, 19 Nov 2009

Chinese consumers’ demand for gold reached record levels in the third quarter as the 60th anniversary of the founding of the People’s Republic of China on October 1 provided a boost to sales of jewellery and commemorative items.

Consumer demand for gold in China reached 120.2 tonnes in the third quarter, up 12 per cent on the same period last year, while jewellery demand increased 8 per cent to 93.5 tonnes, according to the World Gold Council which released its latest supply and demand update on Thursday.

The rapid growth in China’s gold jewellery market following years of import and price controls runs in parallel with a huge expansion in the country’s platinum jewellery market where demand is on course to double this year, according to a report by Johnson Matthey released earlier this week.

However, China was the sole market to see positive growth in gold jewellery demand in the third quarter with large year-on-year falls being recorded in India and the Middle East.

India, still the world’s largest gold jewellery market, saw demand fall to 111.6 tonnes in the third quarter, down 42 per cent year-on-year.

The WGC said high gold prices were the biggest constraint on India’s gold jewellery demand along with the poor monsoon which affected incomes in rural areas.

However, jewellery demand in India has shown an improvement in 2009 after dropping to its lowest levels in at least twenty years in the first three months of this year.

More…

Jim Sinclair’s Commentary

Wall Street is booming while Main Street is suffering.

Mortgage delinquencies hit record high
Mortgage group’s quarterly report raises worries about housing recovery
updated 11:37 a.m. ET, Thurs., Nov . 19, 2009

WASHINGTON – A rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure, adding to concerns about the strength of the economic recovery.

Driven by rising unemployment, such loans accounted for nearly 33 percent of new foreclosures last quarter. That compares with just 21 percent a year ago, when high-risk subprime loans made during the housing boom were the main reason for default.

At the same time, the proportion of homeowners with a mortgage who were either behind on their payments or in foreclosure hit a record-high for the ninth straight quarter.

More…

Jim Sinclair’s Commentary

A step closer, but the battle will be Royal.

Panel votes to audit the Fed; cap its spending at $4 trillion
Measure would audit the Fed’s monetary policies such as interest rates
By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — Rep. Ron Paul, who has sought to audit the Federal Reserve for 26 years, has inched ever so much closer to his goal.

A key congressional panel on Thursday approved legislation introduced by the Texas congressman that – for the first time in the central bank’s 95-year-history — would require government audits of Federal Reserve monetary policy, as well as how much the central bank has lent and will lend to specific banks.

Fed Chief Ben Bernanke and other key members of the Obama administration, including Treasury Secretary Tim Geithner, had vigorously opposed the move.

The measure was approved by the House Financial Services Committee as it considered broad bank regulatory reform legislation, and included a package of other measures weakening the Fed’s power and capping how much it can lend or guarantee.

The committee is now poised to pass the entire bill and has scheduled its final vote on the legislation for December 1.

More…

Jim Rickards: If gold is money again, it goes to between $4,000 and $11,000
Submitted by cpowell on 01:25PM ET Thursday, November 19, 2009. Section: Daily Dispatches
4:15p ET Thursday, November 19, 2009

Dear Friend of GATA and Gold:

Jim Rickards, director of market intelligence for McLean, Virginia-based consulting firm Omnis, was allowed onto CNBC again today to make gold-friendly comments. You may recall his blunt statement on CNBC back in September: "When you own gold, you’re fighting every central bank in the world":

http://www.gata.org/node/7835

Today Rickards remarked that the United States and China are devaluing their currencies against each other in a game of chicken, that gold should easily reach $2,000 per ounce next year just as a matter of supply and demand, and that if gold should start being considered money again, it would have to rise to between $4,000 and $11,000 to support the big increase in the world’s money supply.

You can watch Rickards’ comments at the CNBC archive here:

http://www.cnbc.com/id/15840232?video=1336090735&play=1

Just please don’t tell CNBC that this is all GATA-type stuff.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Jim Sinclair’s Commentary

Stay the Course! What do you think your class 2 gold shares will be earning at $5000 gold?

What do you think these shares will be worth if your management cares more for their stockholders than their own pocket, and pays out in gold or cash as dividends?

Is $6,300 fair value for gold?
By Ambrose Evans-Pritchard
Last updated: November 19th, 2009

The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs.

Dylan Grice from Société Générale says it smells much the same today.

He sees an eery similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965 — which was, of course, the start of the slippery slope leading to the collapse of Bretton Woods and the closure of the US gold window under Nixon.

In the gold mania that followed, the price rose to levels that matched the US dollar monetary base (it reached 140pc at the peak). If that were to occur today after Ben Bernanke’s go at the printing press, gold would have to reach $6,300 an ounce. The US owns 263m ounces of gold while the Fed’s monetary base is $1.7 trillion. Simple equation.

Gold has had its ups and downs, of course. It is trading today at roughly the same real price as in the mid-13th Century — when an ounce bought a light suit of chain mail.

More…

Jim Sinclair’s Commentary

Stay the Course.

Think $1224, $1278, $1650 and then on to the Alf and Armstrong’s numbers.

Gold price may move into uncharted territory
18 Nov 2009, 2100 hrs IST, REUTERS

LONDON: With record-high gold moving further into uncharted territory, analysts who study past chart patterns to predict future behaviour are getting acclimatised and see any correction as an opportunity to lengthen exposure.

Even as chart signals show signs of strain they say the market’s long-term uptrend is intact, in line with the dollar’sdownward trajectory, with prices targeting $1,200 an ounce by the end of 2009 and an eventual target of $1,500 by mid-2010.

Gold has stunned bulls and bears alike, racing up some 30 percent this year to date and registering a record high at $1,149.15 earlier on Wednesday.

On a fundamental basis the market has found plenty of support, moving as a function of the dollar’s weakness. Central banks have come into play, with Asian giants China and India emerging as buyers, while worries aboutinflation have also brought out the metal’s attraction as a hedge.

From a technical standpoint, the rally looks tired. Gold’s Relative Strength Index (RSI), measuring the velocity and magnitude of price direction, stands at 81.7 on a 14-day basis — a rise above 70 indicates that the market is overbought.

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Jim Sinclair’s Commentary

This is demand driven.

U.K. Royal Mint Quadruples Production of Gold Coins (Update1)
By Thomas Biesheuvel and Nicholas Larkin

Nov. 19 (Bloomberg) — The U.K.’s Royal Mint, established in the 13th century, more than quadrupled production of gold coins in the third quarter after demand for the metal increased as investors sought to hedge against a weakening dollar.

Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than tripled to 100,391.3 ounces, the data show.

Gold is set for a ninth annual gain as countries have cut interest rates to near zero percent and spent $2 trillion to pull the global economy out of the worst recession since World War II. The metal reached a record in London yesterday and has gained about 30 percent this year, while the dollar has dropped 7.8 percent against a basket of six currencies.

“There’s still a total lack of confidence in the financial system,” David Russell, a director at Dublin-based brokerage and bullion dealer GoldCore Ltd., said in an interview. “Investors are seeing the benefits of diversifying into gold. Smaller investors are clued into the fact that inflation possibilities are a worry for the future.”

Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces, its Web site showed. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October.

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Jim Sinclair’s Commentary

There is a war here in which politics want influence over banks for Fed decisions.

One way is by loading the entire Fed line of command.

Fed Presidents, Lawmakers Step Up Clash on Appointment Process
By Scott Lanman

Nov. 19 (Bloomberg) — Federal Reserve regional bank presidents and U.S. lawmakers intensified a clash over giving Congress a greater say in appointing the central bank officials, who are now named in part by private-sector banks.

St. Louis Fed President James Bullard said yesterday proposed legislation to subject some officials to Senate confirmation is a “blatant politicization” of the Fed. Separately, seven House Democrats called for an “exploration of possible changes” in how the Fed is governed, saying there’s an “inherent conflict” in the way presidents are named.

Proposed legislation in the Senate risks higher inflation if there’s too much political pressure on the Fed to keep interest rates low while the economy rebounds, some former Fed officials say. Lawmakers say private-sector banks have too much influence at the Fed, and that the regional Fed bank presidents focus too much on inflation at the expense of job growth.

“This is going to be a big battle,” said former Fed Governor Lyle Gramley, now a senior economic adviser to New York-based Soleil Securities Corp. “The danger is the new arrangement will politicize the Fed to the point that they don’t do what’s necessary” when the central bank needs to raise interest rates, he said.

The powers and autonomy of the 12 regional Fed presidents are under threat on several fronts in Congress.

More…

Jim Sinclair’s Commentary

Ignore the top callers and stay the course!

Housing savant Paulson now looks to gold
Paulson & Co. to buy shares of gold-related investments in 2010. Paulson to invest $250 million.
By Hibah Yousuf, CNNMoney.com staff reporter
Last Updated: November 18, 2009: 6:13 PM ET

NEW YORK (CNNMoney.com) — Billionaire John Paulson, who earned his hedge fund billions when he bet against the housing bubble, is waging a new noteworthy bet.

Paulson is investing as much as $250 million in a new gold fund next year.

His hedge fund, Paulson & Co., will launch the fund Jan. 1, 2010 and will buy shares of gold miners and make other investments related to the precious yellow metal, a source familiar with the firm’s plans told CNNMoney.com. Paulson discussed the fund at a meeting with investors on Tuesday

More…

Jim Sinclair’s Commentary

Business may be booming on Wall Street, but main street is deep in the non retrievable tank.

U.S. Mortgage Delinquencies Reach a Record High
By DAVID STREITFELD
Published: November 19, 2009

Nearly one in 10 homeowners with mortgages were at least one payment behind in the third quarter, the Mortgage Bankers Association said Thursday.

That is the highest figure since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008.

“Clearly the results are being driven by changes in employment,” Jay Brinkmann, the association’s chief economist, said on a conference call with reporters. Five million more unemployed people over the last year has turned into about two million more overdue loans, he added.

The association’s delinquency numbers do not include those who are actually in foreclosure, a figure that also rose sharply, to 4.47 percent of all loans. A year ago, it was 2.97 percent.

The combined percentage of those in foreclosure as well as delinquent is 14.41 percent, or about one in seven mortgage holders. About 52 million homeowners have mortgages.

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Jim Sinclair’s Commentary

In today’s speculative world of mega-bucks what difference does position limits make?

The answer is absolutely nothing

Sharks off the British coast: Oil tankers refuse to unload until prices rise… keeping YOUR fuel costs soaring
By RAY MASSEY
Last updated at 12:09 PM on 19th November 2009

These tankers have been parked off our shores for months, refusing to unload their oil until prices have risen even higher. The delay makes millions for speculators… and keeps your petrol costs soaring.

Laden with fuel, three oil tankers sit idly within sight of the British coastline, playing a waiting game that is driving up petrol prices for hard-pressed motorists.

They are part of a flotilla of ten vessels refusing to unload their cargo until market speculation has driven up its price to the level they want.

And as the value of that cargo is currently rising by over £1million a day, driven partly by profiteering traders and speculators, it is unlikely to see a petrol station any time soon.

With such tactics, it is not hard to see why prices at the pumps are forecast to have risen by 26 per cent in a year by this Christmas.

More…

Jim Sinclair’s Commentary

Do not give up your gold insurance as top callers would like you to. Think $1650 and then think Alf and Armstrong.

Read this for an excellent outline of the Formula on a worldwide basis.

Food inflation in India is plus 14.55%

States faced with three brutal options in 2010: inflation, high taxation or default
- Public announcement GEAB N°39 (November 16, 2009) –

16/11/2009

As anticipated by LEAP/E2020 last February, in the absence of major reappraisal of the international monetary order, the world is now entering the phase of geopolitical dislocation of the global systemic crisis. In 2010, as protectionism and the economic and social depression will gain momentum, a large number of States will be compelled to choose between three brutal options: inflation, high taxation or defaulting on their debt. A growing number of countries (USA, United Kingdom, Euroland [1], Japan, China [2],…) have used all their budgetary and monetary cartridges in the 2008/2009 financial crisis and are now left with no other alternative. Nevertheless, out of ideological reflex or in an attempt to avoid by any means having to make such painful choices, they will try to launch new stimulus plans (under different names) even though it is now clear that the huge public effort made in the past months to boost the economy is having no impact on the private sector. Indeed the consumer-as-we-knew-him in the past decades is dead, with no hope of resurrection [3]. Knowing that nearly 30 percent of Western countries’ economies are now made of « economic zombies » (financial institutions, companies and even states, whose signs of life are only due to central banks’ liquidity injections), it is possible to confirm the inevitability of the “impossible recovery” [4]. The international and social (within each country) « everyman for himself » rule is beginning to prevail, as well as a general impoverishment of the ex-Western world, United States in the first place. In fact the West is being scuttled by leaders unable to face the reality of a post-crisis world, who keep resorting to methods from yesterday’s world despite their proved inefficiency.

In this 39th issue of the GEAB, our team has therefore chosen to develop anticipations on general developments in 2010, a year when key states will see their choices be restricted to three brutal options, inflation, high taxation or default, which they will struggle to escape from in vain. Knowing that one of the reasons why stimulus plans are doomed to fail is that the consumer-as-we-knew-him in the past thirty years is dead, we analyze this phenomenon in this issue of the GEAB, as well as fallout for companies, and for the marketing and advertizing businesses. In the field of geopolitics, we present a number of LEAP/E2020 anticipations regarding Turkey by 2015 with regards to both NATO and the EU. Of course, we also present our usual monthly recommendations, as well as the results of the last GlobalEurometre survey.

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Jim Sinclair’s Commentary

There are so many next disasters out there that there is no chance of the anything but expansion in monetary and now fiscal policy.

Have you noticed the boom in road building?

Toll warns of FHA train wreck.
Homebuilder Toll Brothers (TOL) said the FHA has created a potential "train wreck" because it insures home purchases made with down-payments as small as 3.5%. FHA loans accounted for about 8% of the mortgages Toll closed last quarter, while the agency guarantees 20% of all single-family loans. While the FHA’s insurance reserve ratio has fallen to an all-time low, a senior government official denied that the FHA is the next sub prime mortgage crisis.

Jim Sinclair’s Commentary

Pakistan yesterday.

19 slain in courthouse bombing in Pakistan
Blast is seventh attack in less than two weeks in troubled northwest region

PESHAWAR, Pakistan – A suicide bomber killed 19 people Thursday outside a courthouse in northwestern Pakistan, the latest attack in an onslaught by Islamist militants fighting back against an army offensive in the nearby Afghan border region.

The bombing was the seventh attack in less than two weeks in and around Peshawar, the largest city in the northwest. The attacks have killed more than 80 people.

The bomber, who arrived in a taxi, was being searched by police officers at the gate of the city’s lower court when he detonated explosives on his body, government official Sahibzada Anees said.

Several damaged motorbikes were strewn about the site, and firefighters sprayed water on a charred, smoking white car.

‘Beasts … killing our children’

Dr. Saib Gul of the city’s Lady Reading Hospital said 19 people were killed in the attack and 51 had been wounded. At least three of the dead were police.

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Jim,

Gold is the tool or mechanism for defeating a deflationary debt depression at the end of an economic cycle.  Many years of devaluation still lie ahead.

CIGA Eric

Click charts to enlarge in PDF format…

Dear Mr. Sinclair,

Per your comment:

"In the second great depression, gold companies went from relatively small to large dividend payouts.  The same will happen in the third great depression" Royal Gold Raises Common Stock Dividend 13% to $0.36 Per Share."

How about gold companies, (such as GXX) which offer NO dividend? In the second depression, did companies that had no dividends begin to offer them? Do you see that scenario playing out, or not?

Thank you,
CIGA TC

CIGA TC,

This time while enjoying unprecedented prosperity, most gold companies without derivative time bombs will pay small dividends, raising the salary and bonus of management.

This is the New Normal of the Depraved Age.

Gold companies have the greatest stockholders on the planet and generally the other end of the spectrum as management.

Jim

Jim Sinclair’s Commentary

Wall Street may be booming, but Main Street is bombing out.

Read here to see what the CIT situation means to businesses that have relied on them.

Dear Mr. Sinclair,

A brief update from the trenches.  I’ll title this "It’s getting dirty out there!".

On Monday I had a meeting with the local business development representative for our primary hardware supplier (an independent national wholesaler with annual revenue in excess of $1 billion).  The failure of the second largest independent wholesaler (reliant on CIT) gave the representatives company a boost due to new account acquisitions but business overall at existing customers is "weak". 

Our secondary supplier is a nationally recognized co-operative hardware supplier which recently announced its third quarter earnings.  The company was profitable and reduced its debt burden but its gross revenue was down by the most significant amount of any quarter in over a year.  There seems to be an acceleration of downward momentum.

In various meetings with additional sales representatives for smaller, local suppliers I have found that in general there seems to be price wars occurring.  The cost of obtaining goods directly from manufacturers has in most cases been either flat or slightly up depending on the product category but wholesalers have reduced prices dramatically in an effort to retain business and move merchandise. 

Every business must be run with a margin for profit and it appears to me that many are being forced to shrink that margin in order to beat out their competitors and remain active.  This is a dangerous game that allows only a fine margin for error and is simply unsustainable from a long term perspective.  On the other end we are being hit with higher costs for health insurance, tolls and taxes which makes this game all the more difficult.

Last week a major industrial supplier in our area filed for Chapter 11 bankruptcy and is the largest to date to do so locally that I am aware of.  October was our worst month to date this year with sales off over 25%.  November hasn’t been much better.

To this businessman the economies trajectory remains clear. I truly would like to say otherwise but I see the conditions and fear they are deteriorating further.  I know of too many businesses facing difficulties and talk to small business owners every day that are looking for ways to reduce expenditures, cut head counts and simply seek the survival of their entities.  What is taking place on Main Street in this country is truly tragic and is clearly overlooked by the political elite and their legislation. Let’s hope they wake up and realize how much we actually contribute to this nation’s economy however small we may be as individual entities.

Best Regards,
Your Friend,
CIGA Marc

Today at the Fed:

You really think this gang would get on the same page or be quiet.

St Louis Fed President Bullard’s comments on interest rates weighed on the dollar. Bullard said it was possible that the Fed will not raise rates until 2012 if the Fed waits as long as it did to raise rates after the last two recessions.

Jim Sinclair’s Commentary

Ok, so what’s your wager? Will this be settled or tried?

I will go with settled.

Bank of America, UBS, JPMorgan Sued Over Derivatives (Update1)
By Joel Rosenblatt

Nov. 17 (Bloomberg) — Bank of America Corp., UBS AG and JPMorgan Chase & Co. were sued by a California public utility over claims they rigged sales of municipal derivatives and shared illegal profits through kickbacks.

The lawsuit, filed by the Sacramento Municipal Utility District, is based on federal and state antitrust claims. It alleges Charlotte, North Carolina-based Bank of America and more than a dozen other banks conspired to pre-select winners of municipal derivative auctions, coordinated their pricing, and accepted kickbacks disguised as fees from co-conspirators.

The allegations resemble those made by a U.S. grand jury in New York last month, according to the lawsuit filed Nov. 12 in federal court in Sacramento. CDR Financial Products Inc. founder David Rubin and two employees of the Beverly Hills, California- based company were indicted for allegedly accepting kickbacks on investments sold to local governments. CDR is also named as a defendant in the Sacramento case.

The banks engaged in “allocating customers and markets for municipal derivatives, rigging the bidding process by which municipal bond issuers acquire municipal derivatives, and conspiring to manipulate the terms that issuers received,” according to the lawsuit.

The charges against Rubin and the CDR employees were the first to result from a more than three-year investigation into bid-rigging in the municipal bond market. The probe is continuing and has already drawn in some two dozen banks, insurers and local government advisers.

More…

Jim Sinclair’s Commentary

Business on Wall Street is wonderful and everywhere else it is a nightmare.

Delinquencies, Foreclosures Soared in September
Published: Nov. 9, 2009

Delinquent Mortgages and, Foreclosures Soared in September

Today one out of every eight American homeowners with a mortgage (12.5 percent) is either in foreclosure or delinquent in their payments.

Record high rates of foreclosures and delinquencies in September are the latest bad news in the October 2009 Mortgage Monitor LPS, a leading provider of mortgage performance data and analytics.

The nation’s September 2009 foreclosure rate rose to 3.12 percent – a month-over-month increase of 2.6 percent and a year-over-year increase of 88.9 percent. Among individual states, Florida posted the most troubling results with 10.4 percent of loans

in foreclosure, and more than 22 percent of loans reported as non-current.

LPS’ also found large "shadow" foreclosure and REO inventories─loans and properties stuck in the already clogged pipeline that have yet to complete foreclosure and come to market. The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of foreclosures is on the way. Nearly one-third of foreclosures remain in pre-sale status after 12 months – twice as many as the year prior. The six-month average deterioration ratio has risen the past two months to 300 percent, showing that for every loan that improves in status, three more deteriorate further.

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Jim Sinclair’s Commentary

In the second great depression, gold companies went from relatively small to large dividend payouts.  The same will happen in the third great depression.

Royal Gold Raises Common Stock Dividend 13% to $0.36 Per Share
November 18, 2009 10:00 AM Eastern Time

DENVER–(BUSINESS WIRE)–Royal Gold, Inc. (NASDAQ:RGLD ) (TSX:RGL), a leading precious metals royalty company, today announced that its Board of Directors increased the Company’s annual dividend for its shares of common stock from $0.32 to $0.36, payable on a quarterly basis of $0.09 per share. Royal Gold has steadily increased its annual dividend since it first issued a $0.05 annual payment for calendar year 2000.

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Jim Sinclair’s Commentary

From the worthy subscription service www.shadowstats.com

- Annual October CPI-U Inflation -0.18% (+7.1% SGS)

Jim Sinclair’s Commentary

Soon to commonplace.

Employers to be hit with big fee jump for unemployment
Tuesday, November 17, 2009

PASCO COUNTY (Bay News 9) — Owning a small business can be difficult and starting soon local entrepreneurs will be dishing out a lot more cash to the government.

The annual fee employers pay to fund unemployment benefits is about to go up drastically.

The fee is jumping from $8.40 per employee to $100.30.

"That’ll have a huge burden on the small business man and woman — any business in the state of Florida — who are struggling right now," said state

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Jim Sinclair’s Commentary

JB Slear says "With credit card companies reducing limits, and banks refusing to give loans, how is this even be taken seriously?"

Geithner Says Banks Have ‘Obligation’ to Lend More (Update1)
By Rebecca Christie

Nov. 18 (Bloomberg) — Treasury Secretary Timothy Geithner urged U.S. banks to boost lending to small businesses and consumers who still face “very challenging” credit conditions and rising unemployment.

“Banks bear some responsibility for the extent of the damage caused by the crisis,” Geithner said today at a small- business conference in Washington. “You carry a substantial obligation to help our communities get back on their feet.”

Bank of America Corp.’s total loan originations in September fell 6 percent to $53.6 billon from a month earlier and Wells Fargo & Co.’s new lending dropped 14 percent to $47.4 billion, a Treasury Department report two days ago showed. The monthly surveys show lending patterns by the biggest banks receiving government funds from the $700 billion Troubled Asset Relief Program.

As the Obama administration moves from “rescue” policies to what Geithner called the “repairing and rebuilding” phase, joblessness last month reached a 26-year high of 10.2 percent. The Treasury chief today said the administration is committed to doing more to help small businesses get credit needed to “grow and hire new workers.”

Goldman Sachs Group Inc. announced plans yesterday to join Warren Buffett to provide assistance to 10,000 small businesses in the U.S. The $500 million charitable effort aims to provide help ranging from counseling to obtaining funding. Buffett’s Berkshire Hathaway Inc. is the largest shareholder in New York- based Goldman Sachs.

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Jim Sinclair’s Commentary

It is true. It is sad. The result will be the same but sooner.

Smith triumphs, Marx fails, Asia rises and the West declines.

Now do you understand the LONG TERM dollar problem? Do not give up your insurance.

China turns to Adam Smith
It won’t surprise you to learn that whereas in one hemisphere sales of Marx’s Communist Manifesto have rarely been stronger, the other is devouring Adam Smith like never before.
Published: 9:01PM GMT 16 Nov 2009

What is more unexpected is that it is China that has an appetite for the father of modern capitalism, while the West is rediscovering Marx.

Smith’s first masterpiece, theTheory of Moral Sentiments, has been translated into Chinese for the first time, and Chris Berry, professor at Glasgow University, where Smith wrote the book, will next week deliver lectures on it at Fudan University in Shanghai.

China’s Premier, Wen Jiabao, has said he often carries the work – which preceded his more famous work The Wealth of Nations – in his suitcase when he goes abroad. Prof Berry said the earlier book emphasised the importance “not only [of] their material prosperity but also their moral welfare”.

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Jim Sinclair’s Commentary

Just to make it official…

Friction between Obama and Hu on yuan.
Despite repeated urging by President Obama of Chinese President Jintao to liberalize the yuan-dollar peg, the joint statement issued by the two leaders after today’s meeting made no mention of foreign exchange. Hu used the meeting to complain about recent U.S. trade measures that placed tariffs on Chinese exports of pipes and tyres. In its third-quarter report last week, China alluded to freeing up the yuan, but since then the bank has been chiding the U.S. about letting its loose money policies incite speculation against the greenback.

Jim Sinclair’s Commentary

This is the greatest ever disincentive for financial institutions to behave themselves.

If good banks must bail out bad banks, why be a good bank?

You have to believe that none can be this stupid.

Who should pay for ‘too-big-to-fail?‘
The House Financial Services Committee agreed to include in the proposed banking reform bill a provision to require banks and funds to make payments in advance to provide for companies deemed ‘too-big-to-fail,’ aimed at insuring taxpayers don’t wind up footing the bill when banks go bust. "Wall Street companies and executives should have to pay for their own mistakes," said Rep. Paul Hodes, D-N.H., the provision’s author. But the amount to be collected from the industry is to be capped at $200B. A similar bill making its way through Senate would permit bank regulators to use taxpayer funds to dismantle a failed institution, and later recoup those costs from the industry.

Jim Sinclair’s Commentary

For your information.

IRS divulges deal with Switzerland.
The Internal Revenue Service on Tuesday released the terms of its banking secrecy deal with Switzerland. The banks must reveal the names of U.S. depositors who do not file a W-9 form for three years. But the deal only applies to depositors who had more than CHF1M ($992,802) in their accounts at any time from 2001 through 2008, and which generated average annual revenue of more than CHF100,000 ($98,892) over three years. The deal dates from the time UBS (UBS) agreed to pay the U.S. government $780M to avoid prosecution on tax evasion charges. The deal was the result of protracted negotiations between the two countries.

Jim Sinclair’s Commentary

Regardless of PR hounds’ top calling and TA overbought indicators. do not sell your insurance.

Société Générale tells clients how to prepare for ‘global collapse’
Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.
By Ambrose Evans-Pritchard
Published: 6:12PM GMT 18 Nov 2009

In a report entitled "Worst-case debt scenario", the bank’s asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.

"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.

Under the French bank’s "Bear Case" scenario, the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

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A TOUGH WEEK FOR PRESIDENT OBAMA

President Obama was met by strong language from China’s chief banking regulator hours before he arrived in China.  Chief regulator Liu Mingkang said a weak dollar, low interest rates, and other actions have “led to massive speculation".  He was saying, in effect, that the U.S. carry trade (a process in which the U.S. Dollar is borrowed and then sold to purchase assets such as commodities, stocks, and real estate) is creating asset bubbles around the world.

He pointed out that many countries are experiencing a rise in real estate prices due partly to the low interest rates in the U.S. and elsewhere which encourages speculation.

It is true that speculative economic activity has continued in some countries unabated while the U.S., Europe, and Japan have experienced big recessions.  In the faster growing countries, there is no denying that prices are rising for investment assets.

MANY ARE ASKING “WHEN WILL THE CHINESE RENMINBI SEE A RAPID RISE IN PRICE?”

China, which up until last summer had let its currency rise versus the U.S. Dollar by a few percent per year, will have to allow their currency rise more rapidly to keep inflation at bay.  Over the years, we have observed that the Chinese are gradualists and will only let their currency rise when inflation starts to bite.  We see them letting the Renminbi’s value rise more rapidly when Chinese inflation reaches 5%.  This will probably occur in late 2010.

U.S. ECONOMY-A BAD CALL

We have been too pessimistic on the outlook for the U.S. economy.

Although we anticipated and correctly called the direction of the U.S. economy, we were too pessimistic about the duration and depth of the correction.  We now believe that the U.S. economic correction has probably seen its lows.  Over the next year, we expect to see slow growth from the U.S., Europe, and Japan.  The economic growth will be slow compared to what we expect from China, India, Brazil, Indonesia, Taiwan, Singapore and Hong Kong.

REWARDING THOSE THAT CONTRIBUTED TO THE CRISIS! 

THE NEW YORK TMES
Home Builders (You Heard That Right) Get a Gift
November 14, 2009
By Gretchen Morgenson

ON Nov. 6, President Obama signed the Worker, Homeownership and Business Assistance Act of 2009 into law, extending unemployment benefits by 20 weeks and renewing the first-time homebuyer tax credit until next April.

But tucked inside the law was another prize: a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004. The tax cuts will generate corporate refunds or relief worth about $33 billion, according to an administration estimate.

Before the bill became law, the so-called look-back on losses was limited to small businesses and could be used to counterbalance just two years of profits. Now the profit offset goes back five years, and the law allows big companies to take advantage of it, too. The only companies that can’t participate are Fannie Mae and Freddie Mac and any institution that took money under the Troubled Asset Relief Program.

Among the biggest beneficiaries are home builders, analysts say. Once again, at the front of the government assistance line, stand some of the very companies that contributed mightily to the credit crisis by building and financing too many homes.

This is getting to be a habit: companies that participated on the upside and are now reaping rewards from the taxpayers on the downside. The banks that underwrote so many dubious loans, for example, received government aid to get them lending again. Unfortunately, that hasn’t been the result.

One can make an argument that throwing money at the banking system is necessary if we are to jump-start the economy. And banks need a bigger capital cushion to protect against future losses.

But dropping helicopter money on the home builders — the folks who massively overbuilt in community after community — seems decidedly less urgent (unless you are one of these companies, of course). Given that the supply of housing far outstrips demand, it is unlikely that these companies will use these tax breaks to hire workers (unless they go into a completely new line of business).

“I AM surprised that home builders are getting hundreds of millions of dollars given that many have very strong balance sheets,” said Ivy Zelman, chief executive at Zelman & Associates, a research firm. “We question the public policy decision to gift home builders with capital that many will not use to create jobs, since they admit that job growth will be dependent not on capital, but on improving demand.”

When Mr. Obama signed the law, his administration said the tax break would help “struggling businesses.” But as Ms. Zelman pointed out, many large home builders are sitting atop mountains of cash. Pulte Homes, which will receive refunds exceeding $450 million under the new law, has $1.5 billion in cash and cash equivalents on its balance sheet, according to its most recent financial statement.

Hovnanian Enterprises is another big beneficiary of the tax break. It anticipates a refund of $250 million to $275 million next year. It had $550 million in cash in its most recent quarter.

Smaller recipients include Standard Pacific, which is poised to reap cash refunds of $80 million under the new tax break. According to its most recent financial filing, Standard Pacific held $523 million in cash and cash equivalents.

Finally, Beazer Homes told investors that it expects to receive a refund of $50 million. The company reported cash and equivalents of $557 million at the end of September.

Some of the home builders poised to receive tax refunds have even more cash today than they did last year.  D.R. Horton, for example, has $1.966 billion in cash, up 45 percent from September 2008 levels. And some are healthy enough to have retired significant amounts of debt from their balance sheets this year. Pulte has bought back $1.93 billion in debt in 2009.

So what do these companies plan to do with their refunds?

Ken Campbell, the chief executive of Standard Pacific, said the money would allow his company to continue buying land. “Will we build more houses or will there be more people employed in the first quarter? Probably not,” he said. “Will employment accelerate when the market starts to grow? It will.”

Caryn Klebba, a spokeswoman for Pulte Homes, said in a statement that the company planned to use the funds it receives “to support its current operations and, when market conditions improve, fund future growth and expansion.”

In other words, job creation does not seem imminent, notwithstanding the claims of the administration or those in Congress who supported the giveaway.

Representative Lloyd Doggett, a Texas Democrat, has conducted a lonely fight against the tax break all year.

“Some have said this is like a bridge loan to these companies,” Mr. Doggett said in an interview. “Well if it’s a loan, it is like a no-doc loan, because the recipients provide no indication that they will create jobs or do anything other than keep the money. I just feel it is a total windfall.”

Unfortunately, this seems to be another example of an age-old phenomenon: Good Things Come to Those With Lobbying Power.

Securing this tax break was a top priority for home builders, lobbying records show. The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. Last year, the industry spent $8.2 million lobbying.

Much of this year’s lobbying expenditures were focused on arguing for the tax loss carry-forward, documents show.

Among individual companies, Lennar spent $240,000 lobbying while companies affiliated with Hovnanian Enterprises spent $222,000. Pulte Homes spent $210,000 this year.

That’s some return on investment. After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.

Meanwhile, the bag that we taxpayers are left holding gets bigger and bigger.

THE problem here is that this public policy decision was made with little to no input from the public. Sure, tax rebates like these give a lifeline to companies that were about to sink beneath the waves, but would it be so terrible if some builders that lost their heads during the housing mania ceased to exist? It is not as if a housing shortage will result or that more jobs will be lost if these companies don’t receive these tax breaks.

Pretending to promote job creation, the government is dispensing cash to companies that either do not need it or need it precisely because they didn’t run their businesses prudently. Isn’t there something wrong with that picture?

IRAN HAS PROBLEMS, BUT THE AYATOLLAHS WILL NOT GIVE UP.  THEY MUST STAND AND FIGHT, BECAUSE THEY HAVE NO PLACE TO GO.

After all, who will take them?  Will Saudi Arabia to the South? Will Russia and Turkey to the North? Will Iraq to the West? Will Pakistan to the East?

The truth is very few places on earth would welcome them.  A new generation of Ayatollahs is rising.  They have yet to gain enough influence, power, and money to be satisfied, so they will continue to do what they must to stay in charge as long as they can.  The following article points out what they are doing to stay in power.

THE WALL STREET JOURNAL

Revolutionary Guard Tightens Security Grip

Intelligence Agency Replaced by New Organization Reporting to Khamenei; Fallout From Massive Street Protests Over Election
By: Marc Champion

BRUSSELS — Iran’s elite Revolutionary Guard has sidelined the country’s intelligence ministry, forming a new organization that reports directly to the Supreme leader, Ayatollah Ali Khamenei.

Interviews with Iranian analysts and opposition figures, along with recent government announcements, depict a shift under way since Iran’s clerical regime was shaken by the massive street protests that followed disputed presidential elections in June.

The loyalty of the intelligence and security services became a major concern for hard-liners running the regime, analysts say. The changes could have the effect of formalizing the tough and sometimes brutal approach taken with dissidents and protesters in the months since the election.

Some of the intelligence takeover has been publicized. Ayatollah Khamenei announced recently that the Revolutionary Guard’s small existing intelligence unit would be elevated to become a much larger official organization. State media named Hassan Taeb, previously commander of the Basij volunteer paramilitary organization, as the head of the new intelligence operation.

To read full article please visit http://www.guildinvestment.com

SUMMARY

As expected, oil, gold and foreign stocks continue to move up, but we are not ready to sell.  We continue to hold and look for higher prices in coming weeks and months.  Our favorite investments remain oil and oil shares, gold and gold shares, stocks in faster growing countries, export stocks in developed countries, and currencies that can appreciate versus the U.S. dollar.

Thanks for listening.  Please contact us with your comments and suggestions.

Jim,

I won’t even try to debate the merit of these programs.

Move over Cash for Clunkers, it’s time for "Cash for Caulkers."  Soon it will be cash for breathing…

Mr. Doerr calls his proposal, which would give households money to pay for weatherization projects, “cash for caulkers.” Rahm Emanuel, President Obama’s chief of staff, told me, “It’s one of the top things he’s looking at."

CIGA Eric

A Stimulus That Could Save Money
By DAVID LEONHARDT
Published: November 17, 2009

The one highly visible success of the stimulus program has been the cash-for-clunkers program. It induced a boom in vehicle sales this summer that clearly would not have happened otherwise.

The rest of the stimulus has created a lot of jobs — 700,000 to 1.5 million, according to economists’ estimates. But it has done so in thousands of little ways: scattered construction projects, plugged-up school budgets and the like. Politically, these measures are not popular enough to create a groundswell for more of them.

And the economy still needs help. So White House officials are looking at creating a new version of cash for clunkers — this time for home weatherization.

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Jim,

How long ago did we talk about this on JSMineset.com? How many CIGAs were encouraged to hold gold at the time?  At times I understand your frustration.

Similar to 2005-2006, the huge commercial short position is/will be liquidated into strength in 2009-10.

CIGA Eric

Click here to read the article…

Click chart to enlarge in PDF format

Jim,

Down the road, who or what type of gold dealer (s) do you see in the crystal ball that could turn gold into cash discreetly?  If everybody is broke due to future nightmare economic possibilities, who could cash one out?

Thanks,
CIGA Blake

CIGA Blake,

Things will be rough but not that rough. There will always be a white and black market for gold.

Jim

Jim,

The New York Fed last November created a special purpose vehicle, dubbed "Maiden Lane III"

Here are some lyrics from "Maiden Lane" by Jack O’Lent – Chestnut – Bonny Broom

"Take a hard look at me
Will you tell me dear?
What do you see?
When I look at you I’m amazed
When everything is falling down but I remain okay"

Those who remain okay are the chosen few – Banksters!